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The Commissioner of Sales Tax Vs. Ramkrishna Kulvantrai - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax Application No. 1 of 1974
Judge
Reported in[1976]37STC564(Bom)
ActsBombay Sales Tax Act, 1959 - Sections 37, 39, 46 and 61(1); Central Sales Tax Act, 1956 - Sections 9(2) and 10
AppellantThe Commissioner of Sales Tax
RespondentRamkrishna Kulvantrai
Appellant AdvocateB.A. Desai, Adv.
Respondent AdvocateA.M. Thakkar, Adv.
Excerpt:
.....- collection of tax - sections 37, 39, 46 and 61 of bombay sales tax act, 1959 and section 9a of central sales tax act, 1956 - whether collection of sales tax on transactions which were held to be not sales did not amount to contravention of section 9a - transaction in question not sales - no question of sales tax on it arose - respondent can not be called dealer so far as those transactions were concerned - section 9a did not come into operation - sales tax officer had no power to forfeit any amount collected by way of sales tax - held, department cannot forfeit any amount nor can it levy any penalty on respondent. - - (2) above in respect of which a reference is now asked for does not fall under any of the three heads provided for by section 61(1) of the bombay sales tax act,..........that for the period 1st april, 1963, to 31st march, 1964, the respondents were assessed to inter-state sales tax on a turnover of rs. 4,53,353, and transactions which were not sales, leave aside inter-state sales, were determined at rs. 99,640. in respect of this amount of rs. 99,640, the sales tax officer i, b ward, unit iii, bombay, forfeited therefrom a sum of rs. 19,928, contending that the same had been collected by the respondents by way of sales tax on the said transactions of the aggregate value of rs. 99,640, which transactions were, as held by him, not sales. the matter ultimately came before the sales tax tribunal in a second appeal filed by the respondents. the tribunal held that if the transactions in question of the aggregate value of rs. 99,640 were not sales, there.....
Judgment:

Madon, J.

1. This is an application under section 61(1) of the Bombay Sales Tax Act, 1959, read with section 9(2) of the Central Sales Tax Act, 1956, whereby the petitioner - the Commissioner of Sales Tax for the State of Maharashtra - has prayed for an order directing the Sales Tax Tribunal to state the case and refer to this court four questions which are set out in paragraph 4 of the petition.

2. The facts which have given rise to this application briefly stated are that for the period 1st April, 1963, to 31st March, 1964, the respondents were assessed to inter-State sales tax on a turnover of Rs. 4,53,353, and transactions which were not sales, leave aside inter-State sales, were determined at Rs. 99,640. In respect of this amount of Rs. 99,640, the Sales Tax Officer I, B Ward, Unit III, Bombay, forfeited therefrom a sum of Rs. 19,928, contending that the same had been collected by the respondents by way of sales tax on the said transactions of the aggregate value of Rs. 99,640, which transactions were, as held by him, not sales. The matter ultimately came before the Sales Tax Tribunal in a second appeal filed by the respondents. The Tribunal held that if the transactions in question of the aggregate value of Rs. 99,640 were not sales, there could be no amount collected thereon by way of any sales tax by the seller and that the question of forfeiture of such amount did not arise. The Tribunal further held that under the Central Sales Tax Act, 1956, the assessing authorities had no power to forfeit any such amount or to levy any penalty on any sum collected in contravention of section 9A of the Central Sales Tax Act, 1956. Thereafter the petitioner applied to the Sales Tax Tribunal to state the case to this court, which application was dismissed by the Tribunal. Thereupon the petitioner has approached this court for an order directing the Tribunal to state the case, and refer the question as mentioned hereinabove.

3. Section 9A of the Central Sales Tax Act, 1956, provides the follows :

'Collection of tax to be only by registered dealers. - No person who is not a registered dealer shall collect in respect of any sale by him of goods in the course of inter-State trade or commerce any amount by way of tax under this Act, and no registered dealer shall make any such collection except in accordance with this Act and the Rules made thereunder.'

4. Under clause (f) of section 10 of the Central Sales Tax Act, 1956, any person collecting any amount by way of tax in contravention of the provisions contained in section 9A of the said Act commits an offence and is liable to simple imprisonment which may extend to six months, or to payment of fine, or both. So far as the power of forfeiture under the Central Sales Tax Act, 1956, is concerned, in Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra : [1975]3SCR753 , the Supreme Court has held that the assessing authorities under the Central Sales Tax Act, 1956, have no power to forfeit any amount collected in contravention of the provisions of section 9A of the said Act or to impose any penalty in respect thereof in view of the fact that no express provisions in that behalf have been made in the Central Sales Tax Act, 1956, and the provisions of a State Sales Tax Act providing for such power of forfeiture or levy of penalty are not attracted to such a case.

5. The four questions which the petitioner by his application initially wanted this court to direct the Tribunal to refer to this court are as follows :

'(1) Whether, on a true and proper interpretation of section 9(2) of the Central Sales Tax Act, 1956, as amended by the Central Sales Tax (Amendment) Act, 1969, the Tribunal is correct in law in coming to the conclusion that the provisions of section 46 and section 37 of the Bombay Sales Tax Act, 1959, could not be invoked for the purpose of the Central Sales Tax Act, 1956

(2) Whether, on the facts and in the circumstances of the case and on a true and correct interpretation of section 9A of the Central Sales Tax Act, 1956, the Tribunal was correct in law in coming of the conclusion that the collection of Central sales tax on the transactions of Rs. 99,640, which were held to be not sales, did not amount to contravention of the said section 9A

(3) Assuming that such collection of Central sales tax on the transactions of Rs. 99,640 did not contravene the provisions of section 9A of the Central Sales Tax Act, 1956, whether the forfeiture of such tax was permissible in law by virtue of section 46 and section 37 of the Bombay Sales Tax Act, 1959, read with section 9(2) of the Central Sales Tax Act, 1956, as amended by the Central Sales Tax (Amendment) Act, 1969

(4) If it is held that such collection of Central sales tax on the transactions of Rs. 99,640 was in contravention of section 9A of the Central Sales Tax Act, 1956, whether the forfeiture of such tax was permissible in law by virtue of section 37 of the Bombay Sales Tax Act, 1959, read with section 9(2) of the Central Sales Tax Act, 1956, as amended by the Central Sales Tax (Amendment) Act, 1969 ?'

6. In view of the judgment of the Supreme Court referred to above, Mr. Desai on behalf of the petitioner has stated that he does not press before us questions Nos. (1), (3) and (4) but was confining this application only to question No. (2) set out above. It was not urged before us that this question was wrongly decided, but what was urged was that it was not necessary for the Tribunal to give a finding that the collection of Central sales tax on the said transactions of the aggregate value of Rs. 99,640, which were admittedly not sales, did not amount to contravention of section 9A of the Central Sales Tax Act, 1956, and the Tribunal's finding on this point was, therefore, unnecessary and academic. It was further submitted on behalf of the petitioner that though in view of the above Supreme Court decision it was not open to the department either to forfeit the amount which according to the department was collected by way of sales tax on these transactions or to levy a penalty on the respondents in respect thereof, it was open to the State to prosecute the respondents in respect thereof and that though they may not in this particular case prosecute the respondents, they wanted this question to be decided, and decided in favour of the petitioner, to enable the State to prosecute other dealers as and when they collected amounts in respect of transactions which are not sales, and which collection according to the department amounted to collection of sales tax. It is not possible to accept these contentions. On none of the point can the Tribunal's judgment be said to be academic or on any point not arising before it. The Tribunal has decided in favour of the respondents on two grounds : The first is that admittedly these transactions of the aggregate value of Rs. 99,640 not being sales, there could be no question of the respondents having collected any sales tax on it and the respondents could, therefore, not be called a dealer so far as these transactions are concerned, and section 9A of the Central Sales Tax Act, 1956, did not at all come into operation. The second ground upon which the Tribunal held in favour of the respondents was that assuming the provisions of the said section 9A were contravened, the Sales Tax Officer had no power to forfeit any amount, which, according to him, was collected by way of sales tax. Section 9A of the Central Sales Tax Act, 1956, in clear terms talks of the amount by way of tax under the said Act collected by a registered dealer 'in respect of any sale by him of goods in the course of inter-State trade or commerce'. It does not talk of any amount collected by way of tax in respect of any purported sale or any transaction which is a purported sale. If there is no sale by one man to another, the question of collecting any tax on it either rightfully or wrongfully under the said Act does not and cannot arise.

7. We are also unable to see how any reference can now lie in this matter. Mr. Desai, the learned counsel for the petitioner, has frankly conceded that in view of the abovementioned decision of the Supreme Court, the department cannot forfeit the said sum of Rs. 19,928 nor can it levy any penalty on the respondents. Mr. Desai's contention, however, was that the one remedy still left open to the department is to prosecute the respondents. Thus, according to Mr. Desai, this order now affects the liability of the respondents to be prosecuted under section 10 of the Central Sales Tax Act, 1956, for having committed an offence defined in clause (f) thereof. Under section 61(1) of the Bombay Sales Tax Act, 1959, which applies by reason of the provisions of section 9(2) of the Central Sales Tax Act, 1956, a reference can only lie in respect of a question of law arising out of an order of the Tribunal 'which affects the liability of any person to pay tax or penalty, or to forfeiture of any sum of which affects the recovery from any person of any amount under section 39'. No reference can lie only in order to determine a person's liability to be prosecuted. Since question No. (2) above in respect of which a reference is now asked for does not fall under any of the three heads provided for by section 61(1) of the Bombay Sales Tax Act, 1959, the application must fail on this ground also.

8. For the above reasons, we dismiss this application.

9. The petitioner will pay to the respondents the costs of this application fixed at Rs. 120.

10. Application dismissed.


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