1. On a case stated under section 23(1) of the Bombay Sales Tax Act, 1946 (hereinafter called 'the Act' for brevity), the Sales Tax Tribunal has referred the following question for our determination :
'Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that even though in all the dealings with the department the purchasing registered dealer or licence-holder had always signed his name in English when the declaration given for the purpose of claiming deduction under sub-clause (ii) of rule I of sub-section (3) of section 6 of the Bombay Sales Tax act, 1946, was signed in Multani or other regional language and purporting to read as the name of such registered dealer or licence-holder, it was not for the assessee to prove the identity of the signatory but the onus was on the department to prove that the signature on the said declaration was that of some person other than such purchasing registered dealer or licence-holder ?'
2. The period of assessment in question is from 1st April, 1950, to 31st October, 1952. In respect of certain transactions of sale of goods during this period, the respondent-assessee, M/s. R. Kantilal, who is a registered dealer, claimed deduction from the taxable turnover under rule I(ii)(a) of sub-section (3) of section 6 of the Act. In support of the claim for deduction, the assessee produced the certificates issued by the purchasing dealer as provided in rule 26 of the Bombay Sales Tax Rules, 1946 (hereinafter referred to as the said Rules). The Sales Tax Officer disallowed the claim of the assessee in respect of these sales on the ground that the sales appeared to be bogus. In appeal the Assistant Commissioner of Sales Tax allowed some of these sales and rejected others. Some sales were disallowed on the ground that the signatures of the purchasing dealers on the declarations issued by them do not appear to be genuine. Some sales were disallowed on the ground that the declarations were signed by persons whose status and authority were not established. In revision application preferred by the assessee, the Deputy Commissioner of Sales Tax disallowed most of the claims of the assessee. The assessee challenged the order of the Deputy Commissioner, Sales Tax, in revision application before the Sales Tax Tribunal. The Tribunal considered the claim of the assessee in respect of the sales to the 18 registered dealers, which had been disallowed. The Tribunal confirmed the decision of the sales tax authority as regards the sales to 15 dealers out of the 18 dealers. With regard to the sales in favour of the remaining three dealers whose declarations were produced and relied on by the assessee, viz., (1) Kumar & Co., (2) Kisandas Govindram and (3) Gopaldas Shankarlal, it was found that the declarations were signed in Multani language. It was urged on behalf of the assessee that the said declarations in Multani read as the names of the three dealers. The Tribunal held that it is open to a party to sign in English or if the said party prefers, to sign in any regional language, and simply because he signs in regional language such signature cannot be disputed as not being his, and further observed that in such cases the assessee should be deemed to have discharged his onus about the identity of the signatory of the declaration and if it is the case of the department that the signatory signing in the regional language is not the proprietor or the authorised person of the dealers, it is open to the department to produce evidence which it believes will invalidate the declarations. In this view of the matter, the Tribunal sent back the case to the Deputy Commissioner of Sales Tax for fresh decision as regards the sales to the said three dealers, whose declarations were not accepted.
3. Section 6 of the Act provides for the levy and rates of tax on the taxable turnover in respect of sales or supplies of goods payable by the dealer. Sub-section (1) of the section 6 provides for the nature and rates of tax and sub-section (3) thereof lays down the rules for determination of the taxable turnover. As far as the present case is concerned, the assessee has claimed deduction from his turnover on the ground that the sales or supplies were made to a registered dealer. This claim is based on rule I(ii) of sub-section (3) of section 6, which inter alia provides that from the gross turnover of the dealer in respect of all his sales or supplies of goods, including goods specified in Schedule I, during any period of his liability to pay the tax there shall first be deducted his turnover during that period in respect of sales or supplies to a registered dealer of goods certified by him as being intended by him for resale. It is common ground that the assessee would be entitled to deduction as claimed by him, if the declarations of the purchasing dealers are found to be genuine. Rule 26 of the said Rules lays down the procedure for claiming deduction from gross turnover under section 6. Sub-rule (2) of rule 26 inter alia provides that a dealer who wishes to claim a deduction under clause (ii) to rule I of sub-section (3) of section 6 shall on demand produce in respect of the sale for which the deduction is claimed the copy of the counterfoil of the relevant cash receipt, bill or invoice, if any, and a certificate in writing by the purchasing dealer or by a person duly nominated by the purchasing dealer in this behalf, that the goods in question are required by such dealer for resale. Sub-rule (3) of rule 26 prescribed the form of the certificate of the declaration to be issued by the purchasing dealer. The said form shows that it should mention the name of the registered dealer and also bear his signature.
4. So far as the three declarations in question are concerned, it is not disputed that there are registered dealers having the names mentioned in the three declarations. However, what is questioned by the department is the identity of the persons singing the declaration. In this connection we may mention that although there is no specific finding that in their dealings the purchasing dealers always sign their names in English, the question referred to us assumes that that was so. We would, therefore, proceed on the footing that the purchasing registered dealers ordinarily signed their names in English in their dealings with the department, while the certificates or declarations in question purporting to have been issued by them are in Multani.
5. It was urged by Mr. Jetley, learned counsel appearing for the department, that mere production of declarations by the assessee is not enough and the burden lies on the assessee to prove that the declarations are genuine in the sense that they are really singed by purchasing dealer, who purports to have signed the same. It was submitted that the mere fact that the wording of the signature corroborates with the name of the purchasing dealer is not sufficient and it is for the assessee to establish by leading cogent evidence that the person signing in the regional language is either the proprietor or the authorised person of the dealer. On the other hand, it is the contention of Mr. Joshi, learned counsel appearing for the respondent, that once the declaration purporting to have been signed by the registered dealer is produced by the assessee, the burden shifts on the department to show that the declaration is not signed by the registered dealer in whose favour the sales are alleged to have been effected.
6. Now, if a registered dealer wants to claim deduction from his taxable turnover as provided under rule I(ii) of sub-section (3) of section 6, he is required to produce on demand by the Sales Tax Officer the certificate of the purchasing dealer as required by sub-rule (2) of rule 26 of the said Rules. If he fails to produce the certificate on being called upon to do so, he will not be entitled to claim deduction. The prescribed form shows that the certificate must bear the signature of the purchasing dealer in whose name the certificate purports to have been issued. Ordinarily the assessee will be entitled to get deductions on the basis of certificate produced before the sales tax authority. However, it cannot be said that the production of the certificate purporting to bear the signature of the purchasing dealer is conclusive and whenever the officer has some reason to suspect the genuineness of the signature it would be open to him to verify from the form in respect of both the assessee as well as the purchasing dealer to compare the signature on the certificate produced by the purchasing dealer. Ordinarily the department must be having in its possession the record of the registered dealer in whose name the certificate purports to have been made. It is also possible for the department to look into its own record relating to the assessee whether similar certificates were produced by the assessee in the past. This record will show as to whether at some occasion the purchasing dealer had signed in the language in which the certificate purports to have been signed by him. If such records show that the purchasing dealer had never signed in the language in which it purports to be or that the signature of the purchasing dealer in the certificate is different from his signature in the records available in the department, it would be open to the officer to call upon the assessee to produce evidence to show that the declarations were in fact signed by the purchasing dealer. In that event the assessee would be entitled to ask for inspection of his own records as well as the signature of the purchasing dealer in the records in possession of the department and also produce papers containing other genuine signatures of the purchasing dealer for comparison in order to satisfy the officer that the certificate is in fact signed by the purchasing dealer. To our mind the question is really not one of burden of proof but essentially one of procedure to be followed when the officer suspects the genuineness of the certificate or the identity of the person, who has signed the certificate. Broadly stated the procedure referred to above would meet the requirements of such a situation. In the present case the certificates are signed in Multani. In case the department finds from its own records that the purchasing dealer had never signed in Multani or that the signatures of the purchasing dealers in Multani are different from some record with the department, then the officer would be justified in calling upon the assessee to produce evidence to show that the declarations in fact were signed by the purchasing dealer. In that case the assessee is entitled to ask for inspection of the record with the department as stated above and also produce additional evidence to prove the genuineness of the signatures on the certificates. Comparison of genuine signatures of the purchasing dealer with that on the certificate is a legally permissible mode available to the officer to enable him to verify the authenticity of the certificate. In this regard a reference may be made to the decision of the Division Bench of this Court (Madon and Kania, JJ.) in Sales Tax Reference No. 34 of 1974, Commissioner of Sales Tax v. P. G. Shah & Co., decided on 19th February, 1976 (printed at page 289 infra) where the contention of the department that the Tribunal was not entitled to compare the disputed signatures of the seller on the purchase vouchers produced by the assessee with those on the return of the seller was rejected.
7. Reliance was placed by Mr. Jetly on the decision of this Court in Century Spinning and . v. State of Maharashtra, Sales Tax Reference No. 2 of 1969 decided on 31st January, 1975 (printed at page 284 infra) to which my learned brother was a party. In that case the question raised was whether the declarations signed by the two managers Shri Sathe and Shri Pandya of the registered dealer were disallowed by the taxing authorities on the ground that certificate in form K to the Bombay Sales Tax (Registration, Licensing and Authorisation) Rules, 1954, was not signed by a person authorised to do so. On the facts of that case this Court held that the assessees had made no attempt whatsoever to prove that Sathe and Pandya or either of them were persons nominated as required by clause (7) of the licence issued to the purchasing dealer, which shows that in the circumstances of that case the burden was passed on to the assessee to prove that the declarations were signed by the person duly nominated, as required by clause (7) of the licence. The judgment of the Division Bench shows that under rule 17 of the Bombay Sales Tax (Exemption, Set-off and Composition) Rules, 1954, which was applicable in that case expressly provided that the burden of proving to the satisfaction of the Collector, inter alia, that any sale is eligible for exemption from the tax payable under section 9 is on the dealer claiming such exemption and that such dealer is on demand to produce any bills, cash memoranda, accounts and other documents in respect of his claim. It is true that in rule 28, which is applicable to the present case, the burden is not specifically cast on the assessee but the general principle is always there and if any exemption or deduction is claimed it is for the person claiming exemption or deduction to prove that he is entitled to have the same. The decision, therefore, lends some support to our conclusion that mere production of the declaration bearing the signature in the same name is not conclusive proof of the claim for deduction and the officer is entitled to question the genuineness of the signature on the certificate. Some other decisions were also cited before us both by Mr. Jetly and Mr. Joshi. However, we do not think it is necessary to refer to them; since they are not directly applicable to the question before us.
8. It needs to be stated that under the Bombay Sales Tax Act, 1953, as well as under the Bombay Sales Tax Act, 1959, and the Rules framed thereunder, a provision has been made for specimen signatures of the registered dealer and his nominee. For instance under rule 8(2) of the Bombay Sales Tax (Registration, Licensing and Authorisation) Rules, 1954, the application for a licence has to be accompanied by a declaration in form EE-1 containing three specimens of each form of signature which the dealer intends to use for signing certificates in respect of the goods purchased by him under the licence applied for. Similarly, under the Bombay Sales Tax Act, 1959, and the Rules framed thereunder the registered dealer has to furnish a declaration in form N8-A regarding the specimens of his signature. Under this form he has to furnish 3 specimens of his signature which he intends to use in signing declaration in respect of goods purchased by him. There is also a provision for specimen signature on the licence itself. None of these provisions was in existence prior to 1953. We would, therefore, make it clear that whatever we have observed would be relevant only to cases prior to the year 1953.
9. In the view that we have taken, the question referred to us will have to be answered in the negative and in favour of the department. The question of burden of proof will, however, be determined in accordance with what we have stated above in the present case.
10. In the present case, however, Mr. Jetly informs that the department has no records of the relevant period pertaining to both the assessee as well as the purchasing dealer. In the circumstances, therefore, the direction given by the Tribunal, i.e., if it is found that the declarations signed in Multani read as the names of the registered dealers then the claim of the assessee will be allowed, will stand.
11. On the facts of this case, we direct that there shall be no order as to costs.