Single-point sales tax levy upheld where rule 15 was read harmoniously with the Act and prior taxable sale was not proved.

Section 5 of the Rajasthan Sales Tax Act, 1954 was read as authorising single-point levy in a chain of sales and leaving the selection of that point to the rule-making authority. Rule 15 and its explanation to the Rajasthan Sales Tax Rules, 1955 were construed harmoniously as fixing the normal point of tax collection on the first sale by a registered dealer, without extinguishing the liability of earlier taxable dealers. The court also noted that section 16 preserves liability where registration or payment requirements have not been met. On the facts, the alleged earlier sellers were either exempt dealers or not shown to be dealers within the Act, so no prior taxable sale was established and the assessment was upheld.

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Issues: Whether the explanation appended to rule 15 of the Rajasthan Sales Tax Rules, 1955 was ultra vires the Rajasthan Sales Tax Act, 1954 by confining the first point of tax to the first sale by a registered dealer, and whether the assessment made on that basis was valid.

Analysis: Section 5 of the Act authorises tax to be levied at a single point in the series of sales by successive dealers and leaves the choice of that point to the rule-making authority. Section 3 makes dealer liability subject to the Act, including section 5. Read as a whole, rule 15 and its explanation were treated as prescribing the normal point for collection of tax, not as relieving earlier taxable dealers from liability. The explanation was construed harmoniously with the Act and section 16 was noted as preserving liability where a person, though liable, had not complied with registration or payment requirements. On the facts, the alleged prior sellers were either exempt dealers or not shown to be dealers carrying on business within section 2(f), so no prior taxable sale was established.

Conclusion: The explanation to rule 15 was held not to be ultra vires the Act, and the assessment based on single-point taxation was upheld against the petitioner.

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