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State of Rajasthan Vs. Mohan Das Godumal - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtRajasthan High Court
Decided On
Case Number D.B. Sales Tax Reference Nos. 17, 18 and 19 of 1973
Judge
Reported in[1984]56STC158(Raj)
AppellantState of Rajasthan
RespondentMohan Das Godumal
Advocates: A.K. Mathur, Additional Adv.-General
Cases ReferredIn State of Madras v. Erode Yarn Stores
Excerpt:
- - 15,000 per year and passed best judgment assessments for the aforesaid three years......basis. the gross turnover of the assessee was estimated at. rs. 15,000 per year, while the taxable turnover relating to the sale of prepared tea was estimated at rs. 1,500 during each one of the three years. the assessee preferred three appeals before the deputy commissioner (appeals), commercial taxes, ajmer, one in respect of each of the three years. the deputy commissioner was of the view that as the taxable turnover of the assessee was less than rs. 12,000 no exemption certificate was required to be obtained by him. thus, the appellate authority held that the taxable turnover of the assessee was below the incidence of taxation and that there was no justification for imposition of tax upon the assessee. the appeals preferred by the assessee were allowed by a consolidated order.....
Judgment:

Dwarka Prasad, J.

1. In these three cases, a similar question of law has been referred to this Court by the Board of Revenue for Rajasthan at Ajmer under Section 15(3) of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as 'the Act').

2. The assessee, M/s. Mohan Das Godumal, was running a hotel at Bhilwara and he was selling sweets and namkins. He also sold prepared tea to his customers. No books of account were maintained by the assessee nor he filed any returns of his turnover. The Assistant Sales Tax Officer, Ward C, Bhilwara, issued notices to the assessee in respect of his turnover for the years 1960-61, 1961-62 and 1962-63. The Assistant Sales Tax Officer estimated the annual turnover of the assessee in respect of the three years in question at Rs. 15,000 per year and passed best judgment assessments for the aforesaid three years. No tax was payable under the Rajasthan Sales Tax Act at the relevant time on the sale of deshi sweetmeats and namkins, on account of the provisions of Section 4(1) of the Act read with the Schedule, but the Assistant Sales Tax Officer was of the view that the sale of prepared tea by the assessee was taxable and he imposed tax and penalty upon the assessee in respect of the sale of prepared tea on estimate basis. The gross turnover of the assessee was estimated at. Rs. 15,000 per year, while the taxable turnover relating to the sale of prepared tea was estimated at Rs. 1,500 during each one of the three years. The assessee preferred three appeals before the Deputy Commissioner (Appeals), Commercial Taxes, Ajmer, one in respect of each of the three years. The Deputy Commissioner was of the view that as the taxable turnover of the assessee was less than Rs. 12,000 no exemption certificate was required to be obtained by him. Thus, the appellate authority held that the taxable turnover of the assessee was below the incidence of taxation and that there was no justification for imposition of tax upon the assessee. The appeals preferred by the assessee were allowed by a consolidated order passed by the Deputy Commissioner (Appeals) and the assessments were set aside for all the three years in question.

3. The State Government filed three revision petitions before the Board of Revenue against the consolidated order passed by the Deputy Commissioner (Appeals) in respect of each one of the three years. The revision petitions were dismissed by the Board of Revenue by separate orders. As the Board of Revenue did not dispose of the applications for making a reference made under Sub-section (1) of Section 15 of the Act within the time prescribed therefor, the State Government moved this Court under Section 15(3) of the Act and the Board of Revenue was directed to refer the following question of law to this Court for its opinion :

Whether under Notification No. D. 6788/F. 5 (72) E & T/59 dated 24th November, 1959, issued under Section 4(2) of the Rajasthan Sales Tax Act, 'turnover' means 'gross turnover' or 'taxable turnover' for purposes of computing the licence fee

4. The notification dated 24th November, 1959, reads as under :

EXCISE AND TAXATION DEPARTMENT

Notification

Jaipur, November 24, 1959.

No. D. 6788/F.5(72)ET/59.-In exercise of the powers conferred by Sub-section (2) of Section 4 of the Rajasthan Sales Tax Act, 1954 (Rajasthan Act XXIX of 1954), and in supersession of Notification No. F.21(7)SR/55 dated the 14th April, 1955, published at page 40 of Part 1(B) of the Rajasthan Rajpatra dated the 14th April, 1955, the State Government being of the opinion that it is expedient in the public interest to do so, hereby exempts the keepers of hotels and restaurants from the tax imposed by the said Act, on the condition that the person claiming exemption hereunder, holds a valid certificate of exemption, for which the following fee calculated on the basis of turnover is hereby prescribed namely :- Turnover FeeIf the turnover exceeds Rs. 12,000 Rs. 50but does not exceed Rs. 20,000 If the turnover exceeds Rs. 20,000 Rs. 100but does not exceed Rs. 40,000 If the turnover exceeds Rs. 40,000 Rs. 150but does not exceed Rs. 50,000 If the turnover exceeds Rs. 50,000 Rs. 50.for every Rs. 5,000

5. According to the aforesaid notification, the keepers of hotels and restaurants were exempted from liability of tax imposed by the Rajasthan Sales Tax Act, subject to the condition that the person claiming such exemption should obtain a valid certificate of exemption on payment of the fee calculated on the basis of his 'turnover'. Under Section 3 of the Act, every dealer whose turnover in the previous year in respect of the sales of goods exceeded the prescribed limit at the relevant time, was liable to pay tax under the Act on his taxable turnover. Thus, if the taxable turnover of an assessee was below the incidence of taxation, as prescribed under Section 3 of the Act, then no liability to tax could be imposed upon him and there was no corresponding requirement of obtaining an exemption certificate in accordance with the conditions of the notification dated 24th November, 1959. The 'turnover' referred to in the aforesaid notification should necessarily refer to the turnover of the assessee in respect of relatable goods. As no tax was payable on the sales of sweets and namkins, on account of the provisions of Sub-section (1) of Section 4 read with the Schedule annexed to the Act, only the turnover of the assessee in respect of the remaining goods could be subjected to imposition of tax under the Act, except the goods which were exempted from payment of tax under Sub-section (2) of Section 4, on the fulfilment of the conditions specified in the notification issued under that section. The notification dated 24th November, 1959, was one of such notifications issued by the State Government under Sub-section (2) of Section 4, exempting the keepers of hotels and restaurants from tax imposed under the Act, subject to the conditions specified therein. But the assessee could apply for obtaining an exemption certificate under the aforesaid notification only if his turnover in respect of the remaining goods, excluding those goods in respect of which no tax was payable under Sub-section (1) of Section 4, exceeded the sum of Rs. 12,000. In any case, the liability to tax could be imposed upon the assessee, who was admittedly running a hotel, in case his turnover in respect of the remaining goods was above the taxable limit as prescribed in Section 3 of the Act. If the taxable turnover of the assessee was below the incidence of tax, as prescribed under Section 3 of the Act, the question of his obtaining an exemption certificate in accordance with the notification dated 24th November, 1959, did not arise. In the present case, as we have already observed above, the turnover of the assessee, who was the keeper of a hotel, was not taxable because of the provisions of Sub-section (1) of Section 4 read with the Schedule, and further because the turnover of the assessee in respect of the remaining goods was below the incidence of tax, prescribed in Section 3 of the Act.

6. In State of Madras v. Erode Yarn Stores [1961] 12 STC 175, their Lordships of the Madras High Court held that the expression 'turnover' must be interpreted in relation to its context and the 'turnover' may mean only that part of the total turnover of the dealer in respect of which a licence is required. In our view, similar meaning should be given to the expression 'turnover' occurring in the notification dated 24th November, 1959, and that expression should be interpreted as referring to that part of the total turnover of a dealer, in respect of which an exemption certificate was required. If that part of the total turnover of the assessee, which was relatable to the goods for which exemption certificate was required under the notification, was below the incidence of taxation then no liability to tax could be imposed upon such an assessee and the requirement of obtaining an exemption certificate could not be fastened to him, in the absence of a turnover above the taxable limit.

7. The view taken by the Deputy Commissioner (Appeals) and the Board of Revenue in the present cases, that no tax was leviable upon the assessee under the Act, appears to be justified.

8. Thus, our answer to the question referred to us in the aforesaid three cases is that the expression 'turnover' occurring in the notification dated 24th November, 1959, issued under Section 4(2) of the Rajasthan Sales Tax Act, should be interpreted as referable to that part of the gross turnover of the dealer, in respect of which an exemption certificate was required under the said notification.


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