Joshi, J.
1. As directed by the Full Bench of this Court by its order dated 25th of January, 1974, passed under Section 15 (3) of the Rajasthan Sales Tax Act, 1954, hereinafter called the Act, in F. B. Civil Sales Tax Reference Application No. 31 of 1969, the Board of Revenue has referred the following question of law to this Court:--
'Whether when a registered dealer sells to another registered dealer and the first registered dealer is exempt from payment of sales tax, the sale by the second registered dealer is deemed to be sale at the first point and the sale by the first registered dealer exempted from payment of tax would not be taken into consideration for the purpose of sales tax?'
As the question referred to us is a question of law, we need not give the facts leading to this reference in detail. It will suffice to mention material facts which are necessary for the decision of the question referred to us.
2. The applicant a registered dealer was assessed on sales worth Rs. 6906.26 in respect of the spare cycle parts purchased from another registered dealer exempted from payment of tax under a Government Notification No. F. (134) Es 58-1 dated 1-1-60 in the assessment year 1960-61 by the Sales-tax Officer Jaipur City Circle A. The Sales-tax Officer was of the view that the manufacturer-dealer alone could claim exemption under the aforesaid Government Notification dated 1-1-60 and the first point of tax devolved upon the applicant-assessee. The applicant being aggrieved, went in appeal before the learned Deputy Commissioner Commercial Taxation (Appeals) who held that the first point in series of sales was in the hands of the manufacturer registered dealer and so no sales-tax could be charged on the sales effected by him. It was now the turn of the Department which took the matter by way of revision before the Board of Revenue. The Board of Revenue accepted the revision and set aside the order of the Deputy Commissioner, Commercial Taxation (Appeals) and restored that of the assessing authority. The Division Bench of the Board of Revenue relied upon a Division Bench decision of this Court, namely, Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh v. The State of Rajasthan . The applicant thereupon moved an application under Section 15 (1) of the Act before the Board of Revenue requiring it to refer the question of law mentioned in his application to this Court. The Board of Revenue, however, did not accede to the request of the applicant as in its view the question proposed to be referred to this Court was already settled in Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh's case. The assessee therefore moved an application under Section 16 (2) of the Act in this Court whereupon Full Bench of this Court directed the Board of Revenue to state the case and refer the question of law as stated above. The Board of Revenue in compliance with the above direction has referred the above-mentioned question for our decision.
3. Mr. S.M. Mehta learned counsel for the assessee contends before us that the tax payable by a dealer under Section 5 of the Act is at a single point in the series of sales by successive dealer as may be prescribed by the Rules. He submits that under Rule 15 of the Rajasthan Sales Tax Rules, hereinafter called the Rules, the tax payable under the Act is at the first point in series of sales and the first point in series of sales having exhausted in the hands of the manufacturer-seller no sales-tax could be charged from the assessee as his sale was a second point in the series of sale.
4. In reply Dr. S.K. Tewari the learned Advocate-General contends that the sale effected by the manufacturer-dealer in this case being exempted from sales-tax could not be taken to be a sale at the first point in the series of sales end the first point in the series of sale shall be one which is actually liable to payment of sales-tax. He relies upon Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh's case .
5. In order to appreciate the rival contentions advanced before us, it is necessary to refer to some of the relevant provisions of the Act as well as the Rules as they existed during the assessment year 1960-61.
6. Section 2 (s) defines taxable turnover as under:--
'Taxable turnover means that part of the turnover which remains after deducting therefrom the aggregate amount of the proceeds of sale of goods-
(i) on which no tax is leviable under this Act,
(ii) which have already been subjected to tax under this Act,
(iii) which have been sold to persons outside the State for consumption outside the State, and
(iv) which are taxable at the last point and have been sold to registered dealers for the purpose of re-sale within the State.'
Section 4 of the Act provides that the Act will not apply to certain sales. A relevant portion of this section may be reproduced as under:--
'4. Act not to apply to certain sales: No tax shall be payable under this Act on the sale or purchase of any of the exempted goods if the conditions specified in Column 3 of the Schedule are satisfied.
(2) Where the State Government is of the opinion that it is necessary or expedient in the public interest so to do, the State Government may, by notificationin the Official Gazette exempt from tax the sale or purchase of any goods or class of goods or any person or class of persons on such conditions and on payment of such fee as may be specified in the notification................'
Then comes Section 5 of the Act. It reads as under:
'5. Rate of tax.-- The tax payable by a dealer under this Act shall be at such single point in the series of sales by successive dealers as may be prescribed and shall be levied at the rate of 4 per cent on the taxable turnover............'
Rule 15 of the Rules prescribes the mode of levying the sales-tax. Rule 15 as it existed during the relevant period reads as under:--
'15. The point of tax.-- (1) Subject to the provisions of Sub-rule (2) the tax payable under this Act shall be at the first point in the series of sales and this Rule shall apply to all dealers including manufacturers and importers and applies to all goods.
(2) The tax in respect of sale of such goods as may be notified in this behalf by the Government shall be payable at the last point in the series of sales.
(3] Nothing in these Rules shall be construed as affecting any exemption granted by or under Section 4.
Explanation: For the purpose of this Rule the expression 'the first point in the series of sales' means the first sale in such series by a registered dealer and the expression 'the last point in the series of sales' means the last sale in such series to an unregistered dealer or consumer or to a registered dealer for the purpose other than the sale within the State.'
7. Having referred to the relevant provisions of the Act and the Rules, let us now turn back to the contentions advanced before us. The contention of Dr. Tewari is that the first point in the series of sales shall be one which is liable to payment of sales-tax. His say is that a sale which is exempt from tax cannot be taken to be a first point in the series of sales and the first point in the series of sales will only begin when the sale is a taxable one. We are unable to accept this contention. Section 5 of the Act specifically lays down that the tax payable by a dealer under the Act shall be at a single point in the series of sales by successive dealers as may be prescribed. Sub-rule (1) of Rule 15 of the Rules specifically lays down that subject to the provisions of Sub-rule (2) the tax payable under this Act shall be at the first point in the series of sales including the sales effected by manufacturers, importers etc. If We peruse Sub-rule (1) carefully then in our opinion the contention of Dr. Tewari has no legs to stand. Sub-rule (1) does not exclude the sales made by a manufacturer for the purpose of reckoning the first point in the series of sates. Sub-rule (3) clearly lays down that nothing contained in Rule 15 shall be construed as affecting any exemption granted by or under Section 4. Section 4 empowers the Government to exempt certain goods from the levy of sales-tax. A combined reading of Sub-rules (1) and (3) of Rule 15 leads to an irresistible conclusion that merely because the goods are exempt in the hands of the manufacturer that will not shift the point of tax in the series of sale. Sub-rule (3) of Rule 15 of the Rules is of great significance inasmuch as it clearly says that nothing in Rule 15 shall be construed as affecting any exemption granted by Section 4 of the Act. Further in the explanation clause in Rule 15, the rule-making authority has specifically clarified that the expression 'the first point in series of sales' means the first first in such series by a registered dealer. The explanation in this behalf does not make any limitation as to the category of sale. Merely because the first sale is exempted is hardly of any significance while reckoning the first point in the series of sale in view of the explanation incorporated in Rule 15. Had the legislature intended otherwise then it would not have provided the explanation in the manner it has done. The explanation incorported in this Rule makes no distinction for the purpose of reckoning the first point in the series of sales on the ground that the first sale is exempted from payment of tax.
In this connection reference may be made to Kanpur Banaspati Stores v. Commr. of Sales Tax, U. P., Lucknow : [1973]3SCR424 . The term successive dealers in the series of sales came to be interpreted in Kanpur Banaspati Store's case. In that case their Lordships of the Supreme Court have laid down that the registered dealer importing and distributing goods is the first dealer in the State and he shall be considered as one of the successive dealers in the series of sales. According to their Lordships the chain of successive dealers begins from the first dealer and it goes up to the last dealer. Any one of the dealers in this chain can be considered as a successive dealer. The series does not begin in the middle but necessarily begins at the very beginning. From the above decision of the Supreme Court, it will be obvious that the manufacturer-seller is indisputably a dealer in the series of sales by successive dealers in view of Sub-rule (1) of Rule 15 read with Section 5 of the Act, sale effected by the seller shall be at the first point in the series of sales and the first point cannot be shifted to the other successive dealers simply on the ground that the sale at the first point was exempt from the payment of tax. In view of the plain language of Rule 15 read with Section 5 of the Act, we are left with no doubt in our minds that the first point in the series of sales will be the sale made by the manufacturer-seller even though he may be exempt from the payment of sales-tax under Section 4 (2) of the Act, It will be appropriate here to refer to Sub-rule (2) of Rule 15 of the Rules. Sub-rule (2) of Rule 15 empowers the Government to shift the point of tax at the last point in the series of sales by a notification issued in that behalf by the Government. But in the absence of such a notification it is very difficult for us to concede to the contention of Dr. Tewari.
Dr. Tewari, however, strongly relies upon the decision of Division Bench of this Court rendered in Nagaur Sabar Kendriya Sahakari Kar Vikraya Sangh v. The State of Rajasthan and submits that it directly supports his contention and this Court should not depart from the view taken by the Division Bench. We have carefully examined the Division Bench case relied upon by Dr. Tewari, but, we regret, we cannot endorse the line of reasoning adopted in that case. In Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh's case the Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh, hereinafter to be referred as the Sangh, was a registered dealer under the Act. The Sangh had purchased the cereals from certain registered dealers in Ganganagar who were exempt on the basis of exemption certificates held by them. The Sangh claimed that it was not liable to sales-tax under the Act The Sales-tax Officer, however, disallowed its claim and held that the sales pertaining to the cereals were also taxable. The assessment order passed by the Sales-tax Officer was challenged by way of a writ petition before the Division Bench of this Court. In the writ petition it was contended that as the Sangh had purchased the cereals from Ganganagar and Bharatpur dealers who held exemption certificates and so they were not liable to pay the sales-tax. This contention was overruled. The Division Bench speaking through Kan Singh J. observed that-
'The learned counsel contended that the mere fact that they were holders of exemption certificates should not mean that they were not the first sellers. In our view, the fact that they were exempt from payment of tax shows that the sale of goods at that stage was not at all taxable and the taxability arose only after the stage the goods had come into the hands of the Sangh.'
According to the Division Bench the first point in the series of sale will be sale which is actually subjected to payment of tax and the first sale effected by a person who was exempt from sales-tax cannot be reckoned as a sale at the first point. Looking to the plain language of Rule 15 read with Section 5 of the Act we are of the opinion that the first point in the series of sales shall mean the first sale in such series by a registered dealer. The fact that the first registered dealer is exempt from tax is hardly material. There is nothing in the Rule 15 to convert the second point sale to a first point sale simply because the first point registered dealer was exempt from the payment of tax under Section 4 (2). It is well to remember here that the taxing statute is to be strictly construed. It is settled law that the subject is not to be taxed without clear words for the purpose and that every Act of Parliament must be read according to the natural construction of the words. In Cox v. Rabbits (1878) 3 AC 473 Lord Cairns stated in his classic passage the principle thus-
'A taxing statute must be construed strictly; you must find the words to impose the tax and if the words are not found which impose the tax it is not to be imposed.'
In St. Aubyn (L.M.) v. A.G. (1651) 2 All ER 473 at p. 485 Lord Simond quoted the following passage of Lord Wenslydale in Re Micklethwait (1855) 11 Ex Ch 452 which was cited with approval by Lord Halsbury L. C. in Tenant v. Smith (1892) AC 150:--
'It is a well-established rule that the subject is not to be taxed without clearwords for that purpose; and also that every Act of Parliament must be readaccording to natural construction of the words.'
In Bank of Chettinad v. Income-tax Commissioner the Privy Council stated that principle of fiscal legislation that if the person sought to be taxed comes within the letter of the law he must be taxed.
On the other hand, if the Crown seeking the tax cannot bring the subject within the letter of the law, the subject is free, however, apparently within the spirit of the law the case might otherwise appear to be. In Banarsi Debi v. I. T. Officer : [1964]53ITR100(SC) Subbarao J. speaking for the Court ruled as follows:--
'Before construing the section it will be useful to notice the relevant rules of construction of a fiscal statute. In Oriental Bank Corporation. v. Wright (1880) 5 AC 842, the Judicial Committee held that if a statute professes to impose a charge, the intention to impose a charge, subject must be shown by clear and unambiguous language. In Canadian Eagle Oil Co. v. R.. 1946 AC 119 Viscount Simon L. C. observed:
'In the words of Rowlatt J. ......... in a taxing Act one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax, Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.' 'In other words, a taxing statute must be couched in express and unambiguous language. The same rule of construction has been accepted by this Court in Qur-shai Saigal v. Commr. of Income-tax, Punjab : [1963]48ITR1(Bom) wherein it was stated: 'It is well recognised that the rule of construction that if a case is not covered within the four corners of the provisions of a taxing statute no tax can be imposed by inference or by analogy or by trying to probe into the intention of the legislature and by considering what was the substance of the matter......'.'
From the discussion of the above cases it will appear that in fiscal legislation a transaction cannot be taxed on any doctrine of 'the substance of the matter' as distinguished from its legal signification, for a subject is not liable to tax on supposed spirit of law 'or by' inference or by analogy. The subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax on him. The Court must interpret taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency. Now in our opinion the terms of Rule 15 are very wide so as to reckon a first point sale by the registered dealer who is exempt from tax. The words in the Rule 15 are wide enough to cover the sales made by a registered dealer exempt from tax. It does not conceive of shifting of a first point tax to a second point and unless the Rule so provides one cannot by filling up the deficiency construe the second point sale as first point on the ground that the first point sale is exempt from tax. This is exactly what has been done by the Division Bench in Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh's case although there are no words in Rule 15 as it existed then to warrant a conclusion which the Division Bench had arrived at. The language of Rule 15 is unambiguous. There is nothing in the Rule to convert the second point sale into a first point sale simply on the ground that the first point sale is exempt from payment of tax. The Division Bench in that case while interpreting Rule 15 has by a wrong assumption converted the second point sale as first point sale on the ground that the first point sale is exempt from tax. This is against the well recognised principles of construction of the statute as the language of Rule 15 does not warrant such shifting. To us it is clear that Rule 15 is comprehensive so as to embrace in its fold all sales irrespective of whether they have been actually subject to payment of tax or not. The first point in the series of sales therefore has no relation to its actual taxability as has been ruled by the Division Bench. With great respect to the learned Judges we regret to say that the decision in Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh's case so far as it relates to converting the second point sale to a first point is concerned, is not a good law and we are constrained to overrule it. We are supported in our view by decisions of the Madras High Court and Allahabad High Court reported in A.K. Munuswamy Mudaliar & Co. Tannery v. State of Madras 7 STC 1: AIR 1956 Mad 101 and Barjatya Traders v. Sales Tax Officer respectively.
8. In A.K. Munuswamy Mudaliar & Co. Tannery's case AIR 1956 Mad 101 the assessees were licensed tanners and dealers in hides and skins. They purchased raw hides and skins outside the State and were exempt under the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The Sales Tax Authorities held that the hides sold by asses-sees were taxable in their hands. Disapproving the decision of the Sales Tax Authority the High Court of Madras held that the essence of a single point of taxation consists in the fixation of a single point either by the Act itself or under the rule-making power if the Act so prescribes. It was observed that the normal and grammatical meaning of the expression 'paid the tax leviable under the Act' is 'paid such tax if any as has been levied under the Act'. Where no tax is payable under the Act on the purchase made by a tanner because the Madras General Sales Tax Act exempts such transaction of sale or purchase from tax, the tanner on whose purchase no tax is leviable, cannot be said to have not paid the tax leviable under the Act so as to bring him within the class of people who are subjected to tax on the turnover of the tanned hides and skins sold by them. In Barjatya Traders' case the question was whether where the first purchase is exempt from tax and the commodity is sold again, the second purchase will attract the tax or not In that case the assessee purchased 'anhar dal' from 'dal' manufacturers who had imported from outside Uttar Pradesh and were exempt from tax. The Sales-tax Officer took the view that the liability of the assessee to tax is attracted as the 'dal' dealers had not previously paid the tax. The High Court overruled the view taken by the Sales-tax Officer and inter alia observed that-
'In our opinion the Sales-tax Officer has misconceived the basis on which liability to purchase tax is created by Section 3-D (1). That provision imposes purchase tax on first purchases. It is the first purchase of a commodity which attracts the tax. It is irrelevant that for one reason or another the first purchase in some cases has been exempt from tax. If the first purchase is free from tax and the commodity is sold again, the second purchase thus effected will not attract tax. That is because the law imposes purchase tax on the first purchase and not upon the second purchase.'
The above decision clearly lends support to the view which we have taken.
9. We may also refer to a circular of the Commissioner of Excise and Taxation Department No. F.32 (3/1) S.T. 58/606 dated l6th March, 1959. Some doubtswere raised as to whether the goods conditionally exempted on the basis of annual fee should suffer tax in the hands of the subsequent dealers and whether subsequent dealers should also hold exemption certificate to save themselves from payment of tax. The Commissioner after examining the question observed as follows:--
'That the scheme of our Sales-tax Law is first stage single point and the first stage or point has been defined as to first sale by a registered dealer. As such the sale of goods by a dealer in a series of sales subsequent to the first sale by a registered dealer would not be taxable. The liability to pay the tax is exhausted at the stage of sale by the first registered dealer enjoys exemption, the subsequent dealer in the series of sale cannot be made liable to tax and since the subsequent dealers are not liable to tax at all there is no obligation on them to obtain exemption certificate for the sale of such goods.'
In view of the circular of the Commissioner, Excise and Taxation it has been contended by Mr. Mehta that there is no scope for interpreting the rule in other manner excepting one interpreted by the Commissioner. The learned counsel for the Department however contends that the Commissioner's circular has no force of law. It is true that the circular has no statutory force. But it will be useful to extract the passage of Sen J. in Assistant Commercial Taxes Officer v. Azad Bakery Ajmer, as follows :--
'There is no dispute with the proposition that the circular has no statutory force but it certainly provides extraneous aid to construction being 'contemporanea expositio'. When the Commissioner of Commercial Taxes who is a principal executive authority charged with the duty of administering the Act and has the power under Section 12-A of the Act to decide a disputed question as to whether or not any tax is payable in respect of a particular sale or purchase, puts a certain construction which is being acted upon for nearly a decade, there is no reason for us to depart from the construction placed by him.'
The same remarks hold good in the present case also.
10. Dr. Tewari faintly argued that Sub-clause (i) and (ii) of Clause (s) of Section 2 of the Act relate only to Sub-section (1) of Section 4 and have no relation to Sub-section (2) of Section 4 while determining the taxable turnover. We do not find any substance in his contention. In our opinion Sub-clause (ii) of Clause (s) of Section 2 will equally be covered by Sub-section (2) of Section 4 and we are not prepared to confine the operation of Sub-clause (ii) of Clause (s) of Section 2 to Sub-clause (i) of Section 4 only as in our view there is no justification for putting a narrow interpretation on the aforesaid Sub-clause (ii) as suggested by Dr. Tewari looking to the plain language of Sub-section (2) of Section 4 of the Act.
11. In view of foregoing discussion, we are of the opinion that a registered dealer who sells the goods to another registered dealer and the first registered dealer is exempt from payment of sales-tax cannot make the sale effected by the second dealer subject to the liability of payment of sales-tax and in our view that is the answer to the question of law referred to us and we answer accordingly. There shall be no order as to costs.