Breach of sales tax licence conditions can cancel year-wide exemption, not just tax omitted transactions.

A sales tax licence under Form III was subject to the Act and rules, including the obligation to maintain complete accounts showing buyer and seller details. Where the assessee omitted material transactions from its books, that condition was treated as breached. Section 6-A was applied to mean that contravention or non-observance of a licence condition exposed the dealer's sales for the whole year, from the commencement of that year, to tax as if the exemption under sections 5 and 6 did not apply. The exemption was therefore not confined only to the omitted entries but was lost for the year's turnover covered by the licence.

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Issues: Whether breach of the conditions of a sales tax licence under Form III deprived the dealer of exemption for all sales from the commencement of the year in which the contravention occurred, or only for the specific transactions omitted from the books.

Analysis: The licence was expressly subject to the Madras General Sales Tax Act, 1939 and the rules made thereunder, including the condition requiring proper accounts showing the names and addresses of buyers and sellers. The accounts maintained by the assessee were found to be incomplete because material transactions were omitted, so the condition of the licence was not observed. Section 6-A provided that where any condition of a licence was contravened or not observed, the dealer's sales from the commencement of that year could be assessed to tax as if the exemption under sections 5 and 6 did not apply. The provision was held to operate on the dealer's sales for the year, not merely on the omitted entries.

Conclusion: Breach of the licence condition disqualified the assessee from the exemption for the whole year from its commencement, and the assessee was not entitled to exemption on the turnover covered by the licence.

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