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Madhya Pradesh Lac Industries Vs. the Commissioner of Sales Tax, Madhya Pradesh, Indore - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Civil Case No. 89 of 1968
Judge
Reported inAIR1969MP227; 1969MPLJ281; [1969]23STC477(MP)
ActsCentral Provinces and Berar Sales Tax Act, 1947 - Sections 4(6); Central Provinces and Berar Sales Tax Act, 1963
AppellantMadhya Pradesh Lac Industries
RespondentThe Commissioner of Sales Tax, Madhya Pradesh, Indore
Appellant AdvocateY.S. Dharmadhikari, Adv.
Respondent AdvocateRama Gupta, Govt. Adv.
Cases ReferredMohanlal Hargovinddas v. State of M.P.
Excerpt:
- - thus, all the conditions for imposition of purchase tax on the assessee under the amended section 4 (6) were satisfied in the present case. if the language of the certificate is so construed in the context of the amended section 8 of the act and along with the declarations of the appellant, it is manifest that the appellant is liable to pay tax on tobacco imported from bombay dealers for the relevant periods and that the requirements of section 4 (6) of the act are satisfied in this case......section 44 of the madhya pradesh general sales tax act 1958, at the instance of the assessee, the madhya pradesh lac industries, the question which the board of revenue (sales tax tribunal) has referred to this court for decision is:'whether or not the liability to be assessed under section 4 (6) accrues only if the registration certificate of the dealer is in strict conformity with the registration certificate in the prescribed form, namely, form ii as amended after the addition of section 4 (6) to the c. p. and berar sales tax act, 1947,' (sic)2. the material facts are that the assessee is a registered dealer engaged in the business of purchase of stick lac.refining it and selling the product. in the certificate of registration, which was issued to the assessee on 5th may, 1962, lac,.....
Judgment:

Dixit, C.J.

1. In this reference under Section 44 of the Madhya Pradesh General Sales Tax Act 1958, at the instance of the assessee, the Madhya Pradesh Lac Industries, the question which the Board of Revenue (Sales Tax Tribunal) has referred to this Court for decision is:

'Whether or not the liability to be assessed Under Section 4 (6) accrues only if the Registration Certificate of the dealer is in strict conformity with the Registration Certificate in the prescribed form, namely, Form II as amended after the addition of Section 4 (6) to the C. P. and Berar Sales Tax Act, 1947,' (sic)

2. The material facts are that the assessee is a registered dealer engaged in the business of purchase of stick lac.refining it and selling the product. In the certificate of registration, which was Issued to the assessee on 5th May, 1962, lac, filter cloth, Arsenic and other chemicals and charcoal were specified as goods which the assessee could purchase free of tax for the purpose of manufacture of goods for sale. During the period from 11th April 1954 to 31st March 1955 the assessee purchased these goods free of sales tax from the sellers after giving the necessary declaration. After purchasing the aforesaid goods, the assessee did not use them for the purpose for which they had been purchased and despatched the goods outside the State of Madhya Pradesh. When the sales-tax authorities sought to levy on the assessee purchase tax under Section 4 (6) of the C.P. and Berar Sales Tax Act, 1947, the assessee raised the objection that under Section 4 (6) of the Act, as amended by the Madhya Pradesh Sales Tax (Amendment) Act, 1953 (Act No. XX of 1953) no purchase tax could be imposed on it on the goods purchased by it free of tax as those goods had not been 'specified' in its certificate of registration as intended for use by it as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State as required by the amended Section 4 (6). This contention was overruled by the Sales Tax Officer, Raipur, and was also rejected by the Appellate Assistant Commissioner Raipur and the Board of Revenue in the appeals which the assessee then preferred.

3. It is no doubt true that the certificate which was issued to the assessee in 1962 did not contain the specification of goods as contemplated by the amended Section 2 (j) (a) (ii) or Section 4 (6) of the Act. The certificate which was issued to the assessee was in relation to the unamended provisions. But the fact that the goods were not specified in the registration certificate as required by Section 4 (6) of the Act does not in any way absolve the assessee of any liability for payment of purchase tax when admittedly he gave declarations to the sellers at the time of purchasing the goods without payment of any tax that the goods purchased would be used in the manufacture of goods which would be sold by actual delivery in Madhya Pradesh for purposes of consumption in the State and thereafter he did not use the goods purchased for this purpose but despatched them outside the State of Madhya Pradesh. Thus, all the conditions for imposition of purchase tax on the assessee under the amended Section 4 (6) were satisfied in the present case. As held by the Supreme Court in Modi Spinning and Weaving Mills Co. Ltd. v. Commissioner of Sales Tax, Punjab 16STC 310 : (AIR 1965 SC 957) the registration certificate is only evidence that the assessee is a registered dealer for purposes of certain commodities to be used in manufacture and any defect in the registration certificate is not material.

4. The matter is really concluded by the decision of the Supreme Court in Mohanlal Hargovinddas v. State of M.P. 19 STC 263 : (AIR 1967 SC 1022). In that case also, the assessee, a dealer engaged in the business of purchase of tobacco and of selling bidis manufactured out of tobacco purchased, contended that it could not be taxed under the amended Section 4 (6) of the Act as tobacco had not been specified in its certificate of registration as intended for use by it as raw material in the manufacture of goods for the purpose of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State as required by Section 4 (6) of the Act Rejecting this contention the Supreme Court observed that the certificate of registration must be fairly construed in the light of the amended provisions of the Act, namely, Sections 2 (i) (a) (ii) 4 (6) and 8 (3) of the Act and that the omission to make a specific entry in the certificate of registration as required by the amended Section 4 (6) did not confer any benefit on the assessee if there was other incontrovertible evidence to show that the assessee did purchase the goods specified in the certificate of any raw materials in the manufacture of any goods for the purpose of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State and then utilized the goods for other purpose. The Supreme Court further said:

'In this connection reference may be made to Section 2 (j) (a) (ii) which states that a selling dealer is entitled to deduct from his turnover sales to a registered dealer of goods 'specified in such dealer's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State'. It is manifest that the only legitimate object which the purchasing dealer seeks in having a class of goods specified in the certificate of registration as 'raw materials' is to purchase the goods tax-free in the sense contemplated by the Act. By asking for such specification the dealer represents that he intends to use the goods specified in the manufacture of other goods for the purpose of sales by actual delivery in the State of Madhya Pradesh for the purpose of consumption in that State. In this context reference should be made to declarations made by the appellant to the Bombay dealers printed at page 88of the Paper-Book. In these declarations the appellant stated that it was purchasing tobacco for use as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State and that tobacco was so specified in its certificate of registration. As we have already said, the certificate of registration granted to the appellant must be construed in the context of Section 8 as it stood after its amendment and the declarations of the appellant made to the Bombay dealers. If the language of the certificate is so construed in the context of the amended Section 8 of the Act and along with the declarations of the appellant, it is manifest that the appellant is liable to pay tax on tobacco imported from Bombay dealers for the relevant periods and that the requirements of Section 4 (6) of the Act are satisfied in this case. The view that we have taken is borne out by the decision of this Court in 16 STC 310 : (AIR 1965 SC 957), in which it was held that the registration certificate was only evidence that the assessee was a registered dealer for purposes of certain commodities to be used in manufacture and any formal defect in the registration certificate was not material.'

The position here is not different. Admittedly, the assessee purchased certain goods without paying tax for using them as raw materials in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State, and it did not use the goods purchased for that purpose. Therefore, notwithstanding the fact that the certificate of registration did not contain the specification as contemplated by Section 4 (6), the assessee is liable to pay purchase tax under Section 4 (6). Sri Dharmadhikaree, learned counsel appearing for the assessee, sought to distinguish the decision in the case of Mohanlal Hargovinddas 19 STC 263 : (AIR 1967 SC 1022) (supra) by contending that in that case an application for amendment of the registration certificate had been made but the Sales Tax Officer inadvertently omitted to make the requisite specification when amending the certificate. In our judgment, this is not a valid distinction. The ratio decidendi of the decision in the case of Mohanlal Hargovinddas 19 STC 263: (AIR 1967 SC 1022) is that the certificate of registration must be construed in the light of the amended provisions of the Act and that for making the dealer liable to purchase tax under Section 4 (6) of the Act, what is necessary is incontrovertible evidence that the assessee purchased the goods without paying any tax for the purpose indicated in Section 4 (6) and utilized them for other purpose.

5. Following the decision of the Supreme Court in 19 STC 263 : (AIR 1967 SC 1022) (supra) the question referred to us is answered by saying that even if the certificate of registration issued to the dealer is not in strict conformity with the prescribed form corresponding to the amended Section 4 (6), yet the dealer would be liable to be assessed under the amended Section 4 (6) of the Act if there is evidence to show that he purchased the goods without payment of tax for the purpose indicated in Section 4 (6) of the Act and utilized them for other purpose. The assessee shall pay costs of this reference. Counsel's fee is fixed at Rs. 100/-.


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