Chapter III INCIDENCE AND LEVY OF TAX

Incidence of taxation. 5.

1. (1) Subject to other provisions of this Act, every dealer whose turnover during a year exceeds the taxable quantum, shall be liable to pay tax on his turnover from the day his turnover first exceeds the taxable quantum at such rates, not exceeding twenty per centum, as the Government may, by notification, specify: Provided that in a chain of supply of tobacco, the tax shall be realized from the earliest of the tobacconists in the State but a successive tobacconist shall be exempt from payment of tax only if he furnishes, in the manner prescribed, proof of payment of tax: Provided further that if tax has been paid on supply of tobacco in the State but such tobacco is eventually supplied outside the State, the tax earlier paid shall be refunded to the registered dealer who supplied such tobacco outside the State subject to his furnishing, in the manner prescribed, proof of the payment of tax and the supply of tobacco out side the State.
2. (2) Every dealer who has become liable to pay tax shall continue to be so liable until the expiry of three consecutive years during each of which his gross turnover has failed to exceed the taxable quantum.
3. (3) Every dealer, whose liability to pay tax has ceased under the provisions of sub-section (2), shall again be liable to pay tax in accordance with the provisions of sub-section (1).

Taxable quantum. 6. In this Act, the expression “taxable quantum”, means in relation to a tobacconist-

1. (i) who processes, manufactures, imports or Nil
2. (ii) who is not covered by
3. (i) above Rupees five lacs.