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Commissioner of Sales Tax, Maharashtra State Vs. Automobile Products of India Ltd. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax Reference No. 67 of 1980
Judge
Reported in[1983]52STC314(Bom)
Acts Bombay Sales Tax Act, 1959 - Sections 14, 22, 46, 46(2) and 61(1)
AppellantCommissioner of Sales Tax, Maharashtra State
RespondentAutomobile Products of India Ltd.
Excerpt:
.....form 15. the amounts collected by it by way of tax was, as found by the tribunal, equivalent to the amount of purchase tax which had become payable by it under section 14. the amount so collected is described in the debit notes themselves as purchase..........and consequently did not recover any amount by way of tax from the respondent-company. the goods purchased by furnishing certificate in form 15 are required to be used in manufacture of taxable goods for sale and in such certificates the purchaser has to make a declaration to that effect. out of the goods so purchased by the respondent-company, goods of the value of rs. 15,871 were not used by the respondents in the manufacture of taxable goods for sale. accordingly, the respondent-company become liable to pay to the government purchase tax under section 14 of the said act. it may be stated that the said goods of the aggregate value of rs. 15,871 were used by the respondent-company either in job-work like painting scooters or were not accounted for by the agencies to whom the.....
Judgment:

Madon, C.J.

1. This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959, made by the Maharashtra Sales Tax Tribunal at the instance of the Commissioner of Sales Tax. Only one question is submitted to us for our determination in this reference. That question is as follows :

'Whether, on the facts and in the circumstances of the case and on the correct and proper interpretation of the provisions of latter part of sub-section (2) of section 46 of the Bombay Sales Tax Act, 1959, the Tribunal was correct in law in holding that forfeiture of Rs. 1,231.76 collected by the respondent was not justified ?'

2. The facts which have given rise to this reference are that the respondent-company which is a registered dealer also holds a recognition under section 22 of the said Act. During the period 1st April, 1965, to 31st March, 1966, the respondent purchased certain goods and in respect of such purchase give certificates in form 15 to their vendors. As a result of this, their vendors did not become liable to pay sales tax to the Government and consequently did not recover any amount by way of tax from the respondent-company. The goods purchased by furnishing certificate in form 15 are required to be used in manufacture of taxable goods for sale and in such certificates the purchaser has to make a declaration to that effect. Out of the goods so purchased by the respondent-company, goods of the value of Rs. 15,871 were not used by the respondents in the manufacture of taxable goods for sale. Accordingly, the respondent-company become liable to pay to the Government purchase tax under section 14 of the said Act. It may be stated that the said goods of the aggregate value of Rs. 15,871 were used by the respondent-company either in job-work like painting scooters or were not accounted for by the agencies to whom the respondent-company had given such job-work or the goods so purchased were supplied by the respondent-company to their employees. In respect of the transactions relating to these goods, the respondent-company has issued debit notes. In this debit notes, the respondent-company has debited certain sums by way of purchase tax. As the statement of the case shows, in such debit notes the respondent-company had charged by way of purchase tax an amount equivalent to the purchase tax which became payable by them under section 14 because of the contravention of the declaration contained in the certificates in form 15. The Sales Tax Officer held that the amount so collected was in violation of section 46(2) and forfeited this amount. The amount so forfeited aggregated to Rs. 1,231.76. An appeal against the said order of forfeiture was dismissed by the Assistant Commissioner. The respondent-company went in second appeal to the Tribunal. At the hearing of the said second appeal, the two Members of the Bench differed and the appeal was placed before the Special Bench which heard the said appeal along with another appeal which had also been directed to be placed before it. What the Special Bench held was that the excess amount collected by way of tax contemplated by section 46(2) could not apply to each distinct and separate transaction and that the proper mode of determining the applicability of the said provision was to find out the aggregate amount collected by a registered dealer by way of tax during the particular year and to ascertain whether it exceeded the amount of tax payable by the dealer on his turnover of sales during the said year. In the view that it took, the Special Bench set aside the order of the Assistant Commissioner and remanded the case back to him for disposing it of in the light of its judgment.

3. The interpretation put by the Special Bench on section 46(2) of the said Act is not correct in view of the judgment of this High Court in Ramkrishan Kulwantrai v. Commissioner of Sales Tax [1979] 44 STC 117. Section 46(2) of the Act provides as follows :

'46. (2) Prohibition against collection of tax in certain cases. - No person, who is not a registered dealer and liable to pay tax in respect of any sale or purchase, shall collect on the sale of any goods any sum by way of tax from any other person and no registered dealer shall collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act :

Provided that, this sub-section shall not apply where a person is required to collect such amount of the tax separately in order to company with the conditions and restrictions imposed on him under the provisions of any law for the time being in force.'

4. In Ramkrishan Kulwantrai's case [1979] 44 STC 117 the court held :

'To take, however, merely, the aggregate of the amounts collected by a registered dealer by way of tax and deduct from it the amount of tax payable by him and to forfeit the balance would be, as we have pointed out above, doing violence to the language and the meaning of section 46(2), as also to make a mockery of the intention of the legislature in enacting section 46.'

4. In that case the court held that the intention of the legislature was to prohibit collection of tax on every transaction of sale or purchase which was not exigible to tax. It would, therefore, follow that the order of remand made by the Tribunal is unsustainable in law.

5. In the present case, however, as the statement of the case clearly shows the respondent-company had become liable to pay purchase tax to the Government when it sold the goods or used them in contravention of the declarations made by it in the certificates issued by it in form 15. The amounts collected by it by way of tax was, as found by the Tribunal, equivalent to the amount of purchase tax which had become payable by it under section 14. The amount so collected is described in the debit notes themselves as purchase tax. For the above reasons in our opinion, there was no contravention by the respondent-company of the provisions of section 46(2) and the Tribunal ought to have allowed the second appeal filed by the respondent-company and ought to have held that the said sum of Rs. 1,231.76 was not liable to be forfeited.

6. The question referred to us must, therefore, be answered in the affirmative, that is, in favour of the assessees and against the department, though for reasons different then upon which the Tribunal proceeded.

7. The applicant will pay to the respondent-company the costs of this reference.


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