(1) Subject to the provisions of sections 6, 7 and sub-section (2) of section 16, every dealer (except one dealing exclusively in goods declared tax free under section 9) whose gross turnover during the year immediately preceding the commencement of this Act exceeded the taxable quantum shall be liable to pay tax under this Act on all sales effected and purchases made after the coming into force of this Act.

(2) Every dealer, who does not deal exclusively in goods declared to be tax free under section 9, shall be liable to pay tax under this Act from the date on which his gross turnover during any year first exceeds the taxable quantum.

(3) Notwithstanding anything contained in sub-sections (1) and (2) no tax on the sale of any goods shall be levied if a tax on their purchase is levied under this Act.

(4) Every dealer who has become liable to pay tax under this Act 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 and such further period after the date of such expiry as may be prescribed, and on the expiry of this later period his liability to pay tax shall cease.

(5) Every dealer, whose liability to pay tax has ceased under the provisions of sub-section (4), shall again be liable to pay tax under this Act with effect from the date on which his gross turnover first exceeds the taxable quantum.

(6) In this Act, the expression "taxable quantum" means, -

(a) in relation to any dealer who imports for sale or use in manufacturing or processing any goods in Himachal Pradesh: Rupee 1/-;

(b) in relation to any dealer, who himself manufactures or produces any goods for sale: Rs. 4,00,000/- ;

(c) in relation to any dealer, who runs a hotel, restaurant, bakery or other similar establishment wherein food preparations including tea, are served: Rs.8,00,000/- ;

(d) in relation to any particular classes of dealers not falling within clauses (a), (b) and/or (c), such sum as may be prescribed; or

(e) in relation to any other dealer: Rs.8,00,000/-:

Provided that the registration of dealers already registered under this clause shall not be cancelled until their turnover in each of three consecutive years does not entitle them to cancellation under sub-section (4).