Sales tax exemption conditions and resale taxability: dealer resale of hand-made footwear stayed taxable, with collected tax included in turnover.

Hand-made footwear exemption under the sales tax law applied only where every statutory condition was met, including that the goods were sold by the manufacturer or a qualifying family member at or below the prescribed price. A dealer who purchased the footwear from manufacturers and resold it could not claim the exemption, so the resale remained taxable. Sales tax separately collected from purchasers also formed part of the sale consideration under the definition of taxable turnover, because the statute did not exclude that component from the sale price. The reference was answered in favour of the revenue and against the assessee.

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Issues: (i) Whether hand-made footwear sold below the prescribed price by a dealer who was not the manufacturer, but who purchased the goods from manufacturers, was exempt from sales tax on resale; (ii) Whether sales tax separately collected by a registered dealer from purchasers formed part of the sale price and was includible in taxable turnover.

Issue (i): Whether hand-made footwear sold below the prescribed price by a dealer who was not the manufacturer, but who purchased the goods from manufacturers, was exempt from sales tax on resale.

Analysis: Exemption under section 10 read with entry 5 of the First Schedule applied only when all prescribed conditions were satisfied. The conditions required that the footwear be manufactured by hand, sold by the manufacturer himself or by a member of his family, and sold for not more than the specified price. The dealer before the Court was not the manufacturer, so the statutory condition governing the identity of the seller was not fulfilled. The exemption attached to the manufacturer's sale did not extend to the subsequent sale by a different dealer. The scheme of the Act taxed the dealer's own taxable turnover, and the relevant deduction was confined to the sale price received by the dealer himself.

Conclusion: The resale by the dealer was not exempt from sales tax and the issue was answered against the assessee.

Issue (ii): Whether sales tax separately collected by a registered dealer from purchasers formed part of the sale price and was includible in taxable turnover.

Analysis: Under the definition of taxable turnover in section 2(r), the deductible amount was the sale price of goods declared tax-free, meaning the price received by the dealer in his own sale. Amounts recovered from purchasers by way of sales tax remained part of the consideration for the sale. The Act contained no provision treating the dealer as an agent of the Government or excluding the tax component from sale price. The reasoning that tax recovered from the purchaser forms part of the price was consistent with the accepted construction of similar sales tax legislation and with the approved legal principle that the full amount paid by the purchaser is the consideration for the sale.

Conclusion: The sales tax separately collected formed part of the sale price and was rightly included in taxable turnover, so the issue was answered against the assessee.

Final Conclusion: The reference was answered in favour of the revenue, with both questions decided adversely to the assessee.

Ratio Decidendi: Exemption from sales tax must satisfy every statutory condition attached to the exemption, and any tax separately recovered from the purchaser is part of the sale consideration unless the statute expressly excludes it.

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