Kan Singh, J.
1. This writ petition raises a short question about the validity of the explanation appended to Rule 15 of the Rajasthan Sales Tax Rules, 1955, hereinafter to be referred as the 'Rules' which were made by the State Government in exercise of their powers under the Rajasthan Sales Tax Act, 1954, hereinafter to be referred as the 'Act' and it arises in the following way:- -
2. The petitioner is Messrs Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh which will hereinafter be referred as the 'Sangh'. This Sangh was registered as a dealer under the Act. It submitted a return under the Act for the purposes of sales tax for the period 1st July, 1960 to 30th June, 1961. The general turnover was shown as Rs. 7,36,993 out of which the turnover in respect of cereals sold by it during the relevant period was Rs. 7,31,851. About this it was claimed by the Sangh that it was not liable to sales tax under the Act. The Sales Tax Officer considered the stand taken by the Sangh but in disallowing its claim he came to the conclusion that the sale pertaining to the Cereals was also taxable. The contention of the petitioner before the Sales Tax Officer was that the cereals had been purchased by it from certain dealers in Ganganagar who were unconditionally exempt on the basis of exemption certificates held by them. It was also submitted that wheat was supplied by the Government, departments and exemption was claimed in respect of such supply as well. The Sales Tax Officer, after considering the matter, carne to the conclusion that the explanation to Rule 15, which defined for purposes of the rules as to what was the first point in the series of sales, was attracted in the case and since the sale by the petitioner was the first sale in the series of sales by a registered dealer, the petitioner was held liable to pay the sales tax.
3. This assessment order was passed by the Sales Tax Officer on 10th February, 1964, and is exhibit 1 on the record. It is the validity of-this assessment order which is challenged before us and the principal ground that has been taken by the learned counsel for the petitioner is that the explanation to Rule 15 goes counter to the provisions of the Act. He contends that though the Act makes liable any dealer, be he registered or unregistered, in respect of the sales made by him, the explanation appended to Rule 15 limits the levy of tax at the first sale in the series of sales by a registered dealer only. In other words, according to the learned counsel, the point of sale in the rules has to be fixed in the series of sales by dealers as such and not merely in the hands of the registered dealers.
4. The writ petition has been opposed on behalf of the State of Rajas-than and the Sales Tax Officer, Nagaur, who made the assessment. In order to appreciate the controversy raised before us, we find it convenient to refer to the relevant provisions of the Act and the Rules, the validity of which regarding the explanation thereto, is questioned.
5. Section 2(f) defines the term 'dealer' and it runs as follows (omitting portions which are not material):-
'Dealer' means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration and includes-
(i) the Central or a State Government or any of their departments, a local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carries on such business;
(ii) a society (including a co-operative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to, its members;
(iii) a commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal;
(iv) a casual trader;
6. Section 3 of the Act which deals with the incidence of taxation provides that subject to the provisions of this Act, every dealer whose turnover in the previous year in respect of sales or supplies of goods exceeds the prescribed limits, shall be liable to pay tax under this Act, on his taxable turnover.
7. Section 5 prescribes the rate of tax and the material portion which is relevant for our present purposes runs as follows:-
Section 5. Rate of tax.-The tax payable by a dealer under this Act shall be at such single point in the series of sales by successive dealers as may be prescribed and shall be levied at such rate not exceeding ten per cent, on the taxable turnover, as may be notified by the State Government in the Official Gazette:
Section 6 provides for registration of dealers. It enacts that every dealer liable to pay tax shall get himself registered in the prescribed manner.
Section 16 provides for prosecutions and penalties for any person failing to get himself registered as required by the Act or who has without reasonable cause failed to pay the tax within the time allowed.
Section 26 of the Act empowers the State Government to make rules to carry out the purposes of the Act. Sub-section (4) of this section provides that the power to make the rules conferred by this section shall be subject to the condition of the rules being made after previous publication. Sub-section (5) of the same section provides that all rules made under this section shall be published in the Official Gazette, and upon such publication, shall have effect, as if enacted in this Act, from such date as may be notified in this behalf. Lastly, we may refer to Sub-section (6) of Section 26 which provides that all rules made under this Act after the 1st April, 1960, shall be laid, as soon as may be after they are so made, before the House of the State Legislature, while it is in session, for a period of not less than fourteen days. It also provides that the State Legislature may make modifications in any of such rules or may resolve that any such rules should not be made and then such rule shall thereafter have effect only in such modified form or be of no effect, as the case may be.
Rule 15 of the rules, the validity of whose explanation we are to consider, runs as follows:-
15. Point of tax.-(1) Subject to the provisions of Sub-rule (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 State.
8. In order to succeed in the challenge that Rule 15 of the rules or explanation appended thereto is ultra vires the Act, it is the obvious duty of the petitioner to show that the provisions thereof are inconsistent or repugnant to any provision of the parent Act under which the rules are made. In attempting to do so, the learned counsel for the petitioners has sought to argue that the Act imposes liability on all dealers irrespective of they being registered or unregistered and Section 5 of the Act provides that it is the first sale in the series of sales by dealers that can be taken as the point of incidence for tax. Shri Hastimal, therefore, contends that it was not open to the rule-making authority to leave out dealers as such and confine the operation of Rule 15 only to one class of such dealers, namely, the registered dealers. We have already set out above Section 5 of the Act. On a proper analysis it seems to provide inter alia for two things : (i) that the tax is payable by a dealer under this Act at a single point in the series of sales by successive dealers; (ii) such single point may be prescribed by the rules. This section thus enables the Government to make the rules for prescribing at what point in the series of sales, sales tax shall be payable.
9. Now, rules are made to carry out the purposes of the Act and the avowed purpose amongst others of the Act is to provide for the levy of a tax on the sale of goods in the State of Rajasthan. Section 3 of the Act lays down as to what is the incidence of taxation. It provides that subject to the provisions of the Act, every dealer whose turnover in respect of sales exceeds the prescribed limits, shall be liable to pay tax on his taxable turnover. What is noteworthy in this section is that it is subject to the other provisions of the Act. Therefore, it has to be read subject to the provisions of Section 5 of the Act, which provides for the payment of tax by dealers at a single point. As we have already observed, Section 5 of the Act provides inter alia for two things. In the first place, it clearly provides, as already observed, that the tax shall be payable only at a single point in the series of sales and as regards the stage amongst successive dealers at which the tax becomes payable has been left to the rule-making authority to be provided by the rules. It is true that in the class of successive dealers the rule-making authority has, by the explanation, chosen the registered dealers, but this, in our view, does not do away with the liability of other dealers if it arises on account of the operation of any provisions of the law. For facilitating recovery of tax the normal rule is that it is the first sale in the series of sales by a registered dealer that has been taken as the basis for the realisation of tax. This provision, in our view, was never intended to relieve the liability, if any, of other preceding dealers, who were in the stream of succession of sales. We do not think that a registered dealer is precluded, by virtue of the explanation alone, from showing that prior to the sale of the goods in his hands some other preceding dealer had rendered himself liable to the payment of tax and if he is able to show that then the taxing authorities should certainly deal with such a preceding dealer and, we think, the Act makes ample provisions for that. We may refer to Section 16 of the Act in this behalf. Under Section 16, if any person has without reasonable cause failed to get himself registered as a dealer, as required by Section 6 or has without reasonable cause failed to pay the tax or he has failed to furnish the returns, then besides the penalty that he may have to pay, he is liable for the payment of tax as well. The explanation, in our view, does not in so many words profess to go against the provisions of the Act. It only lays down as to what the assessing authority will normally be doing in the matter of realising the tax. It will be for the registered dealer who disputes his liability to tax on account of there being preceding sales in respect of the same goods by other dealers, registered or unregistered, and if they have rendered themselves liable to tax, then it will be for the taxing authority to take appropriate action against such dealers who have been shown to have sold the goods in question. In construing the explanation to Rule 15, it may be pointed out, that so far as the enacting part of the rule is concerned it does not go contrary to Section 5 of the Act, in any manner. In reading the explanation we have to construe it in harmony with the scheme of Section 5 as well as that contained in the enacting part of Rule 15. The explanation can be said to be ultra vires only if it cannot be so harmoniously read with the enacting part of Rule 15, or the provisions of Section 5 of the Act for that matter. Having devoted consideration to it, we are satisfied that the explanation does not appear to be out of tune with the scheme of the enacting part of the rule or with the provisions of Section 5 of the Act. The explanation, as we have already pointed out, embodies only the normal rule that the assessing authority will follow, but thereby it is not precluded from proceeding against preceding dealers, if any, if they are liable to the payment of tax under the Act. Rule 15, as a whole, also does not go contrary to the provisions of the Act in that the sales are taxable only at one point in the series of sales and no more. In other words, we cannot read Rule 15, including its explanation, to provide for incidence of taxation at more than one point in the series of sales.
10. Now, let us turn to the facts of the present case. It was contended by the Sangh that it had purchased the cereals from Ganganagar and Bharatpur dealers as well as from the departments of the Government of Rajasthan. So far as the dealers of Ganganagar and Bharatpur were concerned it was not disputed that they had exemption certificates and were, therefore, not liable to pay the sales tax. It cannot, therefore, be said that in the case of cereals sold by such dealers tax could be realised from them by the assessing authority. The learned counsel contended that the mere fact that they were holders of exemption certificates should not mean that they were not the first sellers. In our view, the fact that they were exempt from payment of tax shows that the sale of goods at that stage was not at all taxable and the taxability arose only after the stage the goods had come into the hands of the Sangh. This contention, therefore, does not advance the case of the petitioners in any manner.
11. As regards the sale said to have been made in favour of the Sangh by the Government departments, it is sufficient to say that there was nothing on record to show that those departments who made the sale in favour of the petitioners were dealers within the meaning of the Act. The term 'dealer' according to Section 2(f) of the Act means 'any person who carries on the business of buying, selling, supplying or distributing goods...' and this term will include the Government or any of the departments carrying on such business. Therefore what is of essence of this definition is the carrying on of business. It was, therefore, necessary for the Sangh to have pleaded that the concerning Government departments carried on business so that they could be regarded as dealers. In our opinion, it is not sufficient to say that the State or the Government departments were dealers. A business can be said to be carried on by a Government department only if it makes sales or purchases of commodities primarily with a view to earning profit. If the Government or any of its departments have to embark on the work of sale or purchase of commodities with a view to ensuring equitable distribution of essential commodities, then this will not necessarily lead to the conclusion that the Government or its departments were carrying on business so as to render the sales of the commodities in the hands of the Government or its departments liable to sales tax. Mere supplying essential commodities for the benefit of the people is normally not carrying on business as is contemplated by Section 2(f) of the Act. In these circumstances it was not enough for the petitioners to merely allege that the Government or its departments were dealers. It is essentially a question of fact whether the Government carried on business in the commodities which were purchased by the Sangh from the Government or its departments. Therefore, there is no sufficient material before us for holding that prior to the goods coming into possession of the Sangh and it selling them in turn, there was any other dealer who had rendered himself liable to sales tax, so that imposition of any sales tax from the Sangh could be regarded as the imposition of sales tax at more than a single point in the series of sales.
12. Having considered the matter, we do not find any good ground to interfere with the order of assessment passed against the petitioner-Sangh.
13. The result is that the writ petition fails and is hereby dismissed. In the circumstances of the case we leave the parties to bear their own costs.