R.L. Gulati, J.
1. At the instance of the Commissioner of Sales Tax, U.P., Lucknow, the Additional Judge (Revisions), Sales Tax, Gorakhpur, has made this reference under Section 11(3) of the U.P. Sales Tax Act on the following question of law:
Whether the sales of foodgrains made during the period from 1st October, 1964, to 31st March, 1965, be also taken into account for determining the turnover of foodgrains under Section 3 of the U.P. Sales Tax Act
2. The assessee is a dealer in foodgrains and the assessment year involved is 1964-65. The turnover of foodgrains was liable to tax up to 30th September, 1964. By a notification issued under Section 3-D(1) of the Act the first purchases of foodgrains became liable to purchase tax with effect from 1st October, 1964, and, consequently, by virtue of Section 3-D(4), the turnover of sales of foodgrains became exempt from sales tax with effect from that date. By an ex parte assessment order the Sales Tax Officer determined the turnover of sales of foodgrains for the period 1st April, 1964, to 30th September, 1964, at Rs. 30,000 and the first purchases for the subsequent period of the assessment year also at Rs. 30,000 and levied sales tax as well as purchase tax. On appeal, the appellate authority found that there were no first purchases liable to purchase tax. He, however, determined the turnover of sales at Rs. 20,000 for the period 1st April, 1964, to 30th September, 1964. Under Notification No. ST-1025/X-1097 (1)/58 dated 1st April, 1959, the turnover of foodgrains is not liable to tax unless it exceeds Rs. 25,000. The turnover of Rs. 20,000 as estimated by the appellate authority was less than Rs. 25,000 and, as such, was not liable to tax. But, in his opinion, the turnover of sales for the period subsequent to 30th September, 1964, could also be taken into consideration in order to determine the liability of the assessee to pay tax. He accordingly estimated the turnover for the period 1st October, 1964, to 31st March, 1965, at Rs. 10,000. As the aggregate sales for the whole year was more than Rs. 25,000 he levied tax on the turnover of Rs. 20,000. The revising authority did not agree with the appellate authority. In his opinion, the turnover of sales for the period subsequent to 30th September, 1964, could not be taken into consideration and as the turnover for the period ending 30th September, 1964, was less than Rs. 25,000, he annulled the appellate order. The Commissioner of Sales Tax is aggrieved and hence this reference at his instance.
Section 3 is the charging section, which provides that :
Section 3. Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rate of...on his turnover of such year, which shall be determined in such manner as may be prescribed : Provided that a dealer shall not, except as otherwise provided in Section 18, be liable to pay the tax, if his turnover of the assessment year is less than Rs. 12,000 or such larger amount as may be notified by the State Government in that behalf either in respect of all dealers in any particular goods, or in respect of a particular class or category of such dealers....
As has been pointed out above, in 1959, the Government raised the non-taxable limit of turnover of foodgrains to Rs. 25,000.
3. Rule 8 of the Rules framed under the Act provides that the dealer's liability to pay tax under the Act shall be determined on the basis of his gross turnover, provided that the turnover in respect of the transactions of forward contracts in which goods are not actually delivered shall not be included in the gross turnover.
4. Thus from the first proviso to Section 3 along with Rule 8, it is clear that the minimum turnover which is not liable to tax for the purposes of Section 3, as modified by the Government, is to be determined with reference to the gross turnover. The expression 'gross turnover' has not been defined in the Act or the Rules, but a reference to Rule 44 shows that it means the turnover minus the following deductions:
(a) Amounts allowed by a dealer as discount;
(b) Amounts allowed to purchasers in respect of goods returned by him to the dealer;
(c) Amounts for which a dealer sells goods which are not in his stock, but which are obtained by him from another dealer for accommodating a particular customer;
(d) Goods exempted under Section 4(1)(a) of the Act;
(e) Sale proceeds of goods covered by an exemption certificate under Section 4(1)(b) of the Act;
(f) Amounts realised by a dealer on account of the sale of his business as a whole; and
(g) Amounts realised by the sale of goods notified under Section 3-A of the Act.
5. We are not concerned with any of the deductions enumerated above. However, it is clear that the gross turnover must consist of sales as are liable to tax under the charging Section 3. Sales which are not liable to tax under the charging section cannot be included in the gross turnover. A similar question arose before a Full Bench of this Court in the case of Commissioner, Sales Tax, U.P. v. Allied Chemicals, Kanpur  23 S.T.C. 165, with regard to the sales made outside U.P. Section 27 of the Act, as it stood at the material time, provided that a tax on sales or purchases of goods shall not be imposed under this Act where such sales or purchases take place outside the State of Uttar Pradesh. The Full Bench held that such sales could not be included in the 'gross turnover' for the purposes of Rule 8 of the U.P. Sales Tax Rules. I was a party to that judgment and after noticing the arguments of the State with regard to Rule 8, I reached the following conclusion :
If Section 27 of the Act operates upon the charging Section 3, it would operate on Rule 8 as well. We must, therefore, interpret 'gross turnover' for purposes of Rule 8 to mean the aggregate turnover of such sales as are taxable or would be taxable but for an exemption provided in the Act.
6. The Full Bench relied on the decision of the Supreme Court in the case of A.V. Fernandez v. State of Kerala  8 S.T.C. 561 (S.C.), where dealing with a similar question under the Travancore-Cochin Sales Tax Act, the Supreme Court held:
The very fact of their non-liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed.
7. Now, in the instant case, the turnover of foodgrains was notified as liable to purchase tax under Section 3-D(1) of the Act with effect from 1st October, 1964. Sub-section (4) of Section 3-D provides that on the issue of a notification under Section 3-D(1), no tax shall be levied under any other section in respect of the goods so notified. Thus, the result of the notification under Section 3-D(1) was that Section 3, which is the charging section for the purposes of levy of sales tax became inoperative and the turnover of foodgrains ceased to be liable to sales tax. Such being the position, the turnover of foodgrains after the issue of the notification under Section 3-D(1) could not be included in the gross turnover.
8. We accordingly answer the question in the negative in favour of the assessee and against the department. The assessee is entitled to costs, which we assess at Rs. 100.