Conditional tax exemption depends on compliance with statutory and licence conditions; breach defeats the exemption and tax remains payable.

An exemption from sales tax under section 5 of the Madras General Sales Tax Act, 1939 was available only if the licence holder complied with the Act, the rules and the licence conditions. Section 3 was the charging provision, while section 5 made exemption conditional upon the prescribed restrictions and conditions; section 13 and rule 5 reinforced the duty to maintain true accounts and follow the statutory scheme. The phrase "subject to" was construed as meaning conditional upon compliance. Breach of the statutory or licence conditions therefore destroyed the exemption, and the assessees remained liable to sales tax.

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Issues: Whether the exemption from sales tax under section 5 of the Madras General Sales Tax Act, 1939 was available to a licensee who had breached the conditions attached to the licence and the rules made under the Act.

Analysis: Section 3 was the charging provision and section 5 granted exemption only subject to restrictions and conditions prescribed under the Act and the rules. Section 13 required true and correct accounts, while rule 5 and the licence form showed that the exemption was linked to compliance with the statutory scheme. The expression 'subject to' was construed as meaning 'conditional upon', so the licence conferred exemption only so long as its conditions were observed. Breach of the Act, the rules, or the licence conditions destroyed the availability of the exemption.

Conclusion: The exemption was conditional upon compliance, and the appellants were not entitled to exemption because they had contravened the statutory and licence conditions; the finding was against the assessee.

Final Conclusion: Sales tax was payable notwithstanding the licence, and the dismissal of the appeals left the assessment intact.

Ratio Decidendi: An exemption granted 'subject to' prescribed restrictions and conditions is available only upon compliance with those conditions, and breach of the statutory or licence conditions disentitles the holder from the exemption.

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