1. These revision petitions are filed under section 23(1) of the Mysore Sales Tax Act, 1957, to be referred to as 'the Act' hereinafter. They are connected petitions. They raise a common question of law. They are directed against the same assessee. The transactions with which we are concerned in these cases are sales of Karadi oil. S.T.R.P. 46 of 1963 relates to the assessment of the assessee for the assessment year 1959-60 and S.T.R.P. 47 of 1963 relates to the assessment of the assessee for the assessment year 1958-59. In these petitions, the question of law for decision is whether the assessee is entitled to the exemption claimed by him.
2. There is no dispute that the transactions with which we are concerned in these cases fall within the scope of section 5 of the Act. The controversy centres round the question whether they are exempted under section 8 read with entry 28 of the Fifty Schedule. It is needless to say that it is for the assessee to satisfactorily establish that he is entitled to the exemption claimed. This aspect of the case does not appear to have been borne in mind by the Sales Tax Appellate Tribunal.
3. Entry 28 in the Fifth Schedule prior to its amendment on 1st January, 1959, read as follows :-
'Products of village industries when sold for the first time.'
4. The explanation to that entry read :
''Village Industry' in item 28 means village industry as defined by the Khadi and Village Industries Act, 1956.'
5. If the entry had stood as it was before 1st January, 1959, there is no dispute that the petitioner's sales would have been exempted from tax. After the amendment of entry 28, on 1st January, 1959, the said entry reads :
'Products of village industries when sold by a bona fide producer recognised by the Commissioner, if necessary, after consultation with the Khadi and Village Industries Commission constituted under the Khadi and Village Industries Act, 1956.'
6. The explanation was also amended. The amended explanation reads :-
''Village Industry' in item 28 means village industry as defined in the Mysore Khadi and Village Industries Act, 1956, if the number of persons employed in, or the number of units of production of each such industry does not exceed such number as may be prescribed.'
7. The State Government did not frame any rule till 7th May, 1959, prescribing the maximum number of units of production or the persons to be employed for being entitled to the exemption as provided in the explanation nor was any procedure laid down for moving the commission for getting the necessary recognition.
8. The relevant rules (which came into force on 7th May, 1959) are rules 25A and 25B. Rule 25A says :-
'For purposes of explanation (I) to the Fifty Schedule, in respect of any village industry specified in column (2) of the following table, the number of units of production of each such industry shall not exceed the number specified in the corresponding entries of column (3) of the said Table, namely :- * * *'
9. Rule 25B reads :
'(1) The Commissioner may on an application from a dealer who is a bona fide producer of products of any village industry referred to in serial No. 28 of the Fifth Schedule grant a certificate of recognition, if he is satisfied that he is a bona fide producer entitled to the exemption from tax : Provided that before granting any such certificate, the Commissioner may, if necessary, consult the Khadi and Village Industries Commission constituted under the Khadi and Village Industries Commission Act, 1956.
(2) The certificate of recognition so issued shall be valid from the date of issue to the date of cancellation.
(3) The certificate of recognition shall be liable to be cancelled if the holder thereof ceases to be a bona fide producer or contravenes any of the provisions of the Act or these rules.'
10. Merely because of the fact that rules 25A and 25B came into force on 7th May, 1959, the Tribunal has come to the conclusion that it should be held that entry 28 itself came into force on 7th May, 1959. The point for decision is whether this view is correct in law.
11. Entry 28 purports to have come into force on 1st January, 1959. In the absence of that entry, exemption claimed would not have been permissible. Hence if it is held that that entry came into force on 7th May, 1959, then till that date no one can claim any exemption under that entry. As mentioned earlier, the transactions with which we are concerned are exigible to tax in the absence of the entry in question.
12. The benefit of that entry, in our view, was available even before rules 25A and 25B came into force. The Commissioner could have been moved and his recognition obtained even if no definite procedure in that regard had been prescribed. In the absence of the rules contemplated by the explanation to entry 28 the limits placed on the ambit of entry 28 were ineffective. In other words, all transactions complying with the requirements of that entry were entitled to the exemption in question. The submission of Sri B. V. Krishnaswami Rao, the learned counsel for the assessee, that as the State Government had not prescribed the maximum number of units of production or the persons employed as contemplated by the explanation to entry 28, his client could not have applied for obtaining the required recognition by the Commissioner, is not correct as seen earlier. On this aspect the learned counsel for the assessee tried to take support from the Full Bench decision of the Bombay High Court in Bhima Balu Madigar v. Basangouda Mamgouda Patil : AIR1954Bom513 . The ratio of that decision does not bear on the point under consideration. It deals with a different principle of law.
13. The last contention advanced on behalf of the assessee, which contention has appealed to the Tribunal is that without rules 25A and 25B, the assessee could not have passed on the tax liability to his purchasers and, therefore, the assessment is bad. The facility to pass on the tax liability to the purchasers is not a necessary condition precedent for the validity of a sales tax law. It is true that under the various sales tax laws in force in this country, provisions are made for passing on the tax liability to the purchasers. But this is because the Legislature so willed it. But that has nothing to do with the competence of the Legislature to impose sales tax on the dealer without giving him any power to pass on that liability to anyone. This position is now placed beyond controversy by the decision of the Supreme Court in Konduri Buchirajalingam v. The State of Hyderabad and Others : AIR1958SC756 , wherein the Supreme Court laid down that sales tax can be a sales tax though the primary liability for it is put upon a person without giving him any power to recoup the amount of tax payable from any other party.
14. For the reasons mentioned above, we allow these petitions and set aside the order of the Tribunal and restore that of the Deputy Commissioner. In the circumstances of this case, we make no order as to costs.
15. Petitions allowed.