1983 (12) TMI 268 - HC - VAT and Sales Tax

Interpretation of 'turnover' under Rajasthan Sales Tax Act exempts taxable turnover below threshold

State of Rajasthan Versus Mohan Das Godumal

The Rajasthan High Court held that the term 'turnover' in a notification under the Rajasthan Sales Tax Act should be understood as part of the dealer's ... - Issues:Interpretation of the term 'turnover' in a notification under the Rajasthan Sales Tax Act, 1954.Analysis:The judgment of the Rajasthan High Court, delivered by Dwarka Prasad, J., pertained to three cases where a question of law was referred to the Court by the Board of Revenue for Rajasthan regarding the interpretation of the term 'turnover' in a notification under the Rajasthan Sales Tax Act, 1954. The cases involved an assessee running a hotel who sold sweets, namkins, and prepared tea to customers without maintaining proper accounts or filing returns. The Assistant Sales Tax Officer estimated the annual turnover at Rs. 15,000 and imposed tax and penalty on the sale of prepared tea. However, the Deputy Commissioner (Appeals) set aside the assessments for all three years, stating that as the taxable turnover was below Rs. 12,000, no tax was justified. The State Government filed revision petitions against this decision, which were dismissed by the Board of Revenue. Subsequently, the Court was asked to determine whether the term 'turnover' in the notification referred to gross turnover or taxable turnover for computing the license fee.The notification dated 24th November, 1959, exempted hotel and restaurant keepers from tax under the Rajasthan Sales Tax Act if they obtained a valid exemption certificate based on their turnover. The Court analyzed that the turnover referred to in the notification should relate to the turnover of the assessee concerning taxable goods. Since no tax was payable on sweets and namkins, only the turnover of goods subject to tax could be considered for imposition of tax. The Court emphasized that if the taxable turnover was below the tax threshold, no tax liability existed, and hence, no exemption certificate was necessary. Referring to a previous case, the Court highlighted that the term 'turnover' should be interpreted in context, indicating the part of the total turnover requiring a license or exemption certificate. Therefore, the Court concluded that the term 'turnover' in the notification should be understood as part of the gross turnover requiring an exemption certificate.In conclusion, the Court held that the interpretation of 'turnover' in the notification under the Rajasthan Sales Tax Act should be linked to the part of the dealer's gross turnover necessitating an exemption certificate. The decision of the Deputy Commissioner (Appeals) and the Board of Revenue, stating no tax liability for the assessee, was deemed justified based on the interpretation of the term 'turnover' in the notification.