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Bhojmal and Sons Vs. Commissioner of Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberM.C.C. No. 39 of 1978
Judge
Reported in[1982]50STC36(MP)
AppellantBhojmal and Sons
RespondentCommissioner of Sales Tax
Appellant AdvocateG.M. Chaphaker and ;Thatte, Advs.
Respondent AdvocateSurjeetsing, Government Adv.
Cases ReferredCement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax
Excerpt:
- indian penal code, 1890.section 306 :[dalveer bhandari & harjit singh bedi,jj] abetment of suicide deceased, a married woman, committed suicide - allegation of abetment of suicide against appellant husband and in-laws - ocular evidence was sketchy - dying declaration recorded by tahsildar completely exonerated all accused in-laws of any misconduct dispelling any suspicion as to their involvement - letter of threat allegedly written by appellant to father of victim was concocted piece of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. - 4. the contention of the learned counsel for the assessee is not well-founded......of the act read with section 9(2) of the central act on the ground that the dealer had shown inter-state sales in the returns at rs. 8,66,957 only, whereas total inter-state sales were rs. 73,17,232. the assessing authority did not accept the explanation of the assessee that the subsequent inter-state sales were not liable to tax and therefore were not required to be shown by him in the returns. on appeal by the assessee against the order of the assessing authority, the deputy commissioner of sales tax negatived the contention of the assessee that the goods had been purchased in the course of inter-state trade and their sale was also in the course of inter-state trade and no tax was leviable because the sales were covered by section 4(2)(b) of the central act as the goods were.....
Judgment:

R.K. Vijayvargiya, J.

1. By this reference under Section 44(1) of the M. P. General Sales Tax Act, 1958 (hereinafter referred to as the Act), the Board of Revenue, M. P., Gwalior, has referred the following questions of law for the opinion of this Court:

(1) Whether, under the facts and circumstances of the case, sale of oilcakes amounting to Rs. 14,23,062 effected by the applicant to the dealers in Maharashtra and Madras States outside the State of Madhya Pradesh were sales of unascertained or future goods and as such covered by Clause (b) of Sub-section (2) of Section 4 of the Central Act ?

(2) If the answer to the first question is in the negative, whether, under the facts and circumstances of the case, the subsequent sales of oilcakes fall under Clause (b) of Section 3 of the Central Act and were covered by the proviso to Sub-section (1) of Section 9 of the Central Act and the State of Madhya Pradesh was competent to levy tax though no C form was obtained by the assessee in connection with the purchase of such goods, viz., oilcakes, nor such C form was required to be furnished for the sale of such goods as they were exempt from payment of sales tax under the appropriate sales tax laws of the States of Rajasthan and Uttar Pradesh ?

(3) Whether, under the facts and circumstances of the case, penalty imposed on the applicant under Section 43(1) of the State Act read with Section 9(2) of the Central Act was proper and legal ?

2. The facts giving rise to this reference as set out in the statement of the case are as follows : The assessee dealt in foodgrains, oil-seeds, etc., and was assessed to sales tax under the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act) for the Diwali year 1960-61. Oilcakes sold by the dealer in inter-State trade was assessed to tax. Penalty of Rs. 1,000 was also imposed under Section 43 of the Act read with Section 9(2) of the Central Act on the ground that the dealer had shown inter-State sales in the returns at Rs. 8,66,957 only, whereas total inter-State sales were Rs. 73,17,232. The assessing authority did not accept the explanation of the assessee that the subsequent inter-State sales were not liable to tax and therefore were not required to be shown by him in the returns. On appeal by the assessee against the order of the assessing authority, the Deputy Commissioner of Sales Tax negatived the contention of the assessee that the goods had been purchased in the course of inter-State trade and their sale was also in the course of inter-State trade and no tax was leviable because the sales were covered by Section 4(2)(b) of the Central Act as the goods were unascertained and future goods and their appropriation to the contract of sales was at destination. The alternative contention of the assessee that the subsequent sales were not liable to be taxed by the State of Madhya Pradesh because the proviso to Section 9(1) of the Central Act was not applicable, was also negatived. The appellate authority also upheld the order of the assessing authority levying the penalty but reduced the amount to Rs. 400. The second appeal preferred by the assessee was also dismissed by the Board of Revenue and the order of the appellate authority was upheld. At the instance of the assessee, the aforesaid questions of law have been referred by the Board of Revenue for the opinion of this Court.

3. As regards the first question the learned counsel for the assessee contended that the goods were purchased by the assessee from the dealers in Uttar Pradesh and Rajasthan and were consigned to the destination in Maharashtra and Madras in the name of the assessee. The goods were sold by the assessee to the buyers of Maharashtra and Madras by endorsing the documents of title, i.e., railway receipt, but the sales were conditional and the transactions were finalised only after fulfilment of the condition that the goods would be analysed by the purchasers and the sale would be complete only if the goods were found to conform with the quality agreed between the parties, and that as the analysis was done after the goods had reached the destination the property in the goods was transferred to the purchasers at the destination in Maharashtra and Madras and therefore the sale was complete in those States and the goods were not liable to be taxed by the State of Madhya Pradesh. He placed reliance upon Section 4(2) of the Central Act.

4. The contention of the learned counsel for the assessee is not well-founded. Section 4(1) of the Central Act provides that subject to the provisions contained in Section 3, when a sale or purchase of goods is determined in accordance with Sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. Sub-section (2) of Section 4 provides that sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State-

(a) ...; and

(b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation.

However, the provisions of Section 4 are subject to the provisions of Section 3 of the Central Act. Section 3 of the Central Act provides that a sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-

(a)...

(b) is effected by a transfer of documents of title to the goods during their movement from one State to another.

In the present case it is common ground that the sale is effected by the assessee by transfer of documents of title to the goods during their movement from the States of Rajasthan and Uttar Pradesh to the States of Maharashtra and Madras. Therefore the sales shall be deemed to take place in the course of inter-State trade or commerce under Section 3 of the Central Act and Section 4 thereof is not attracted. Moreover, the taxing authorities have negatived the contention of the assessee that the goods were unascertained. The goods were in the course of transit and were ascertained. It may be that the sales made by the assessee to the buyers at Maharashtra and Madras by transferring the documents of title were conditional subject to the buyers' option to return the goods if some prescribed conditions were not fulfilled. But a conditional sale is a sale all right in which the property in goods passes at once to the buyer. On appreciation of the materials on record the Board of Revenue has held that the sale was of ascertained goods effected by a transfer of documents of title to the goods during their movement from one State to another and therefore the sale took place in the course of inter-State trade or commerce and was liable to tax under the provisions of the Central Act. No error of law has been committed by the Board of Revenue in arriving at the said conclusion. Our answer to question No. (1) referred to us is in the negative and against the assessee.

5. As regards question No. (2) it would be useful to reproduce the relevant provisions of Sections 3, 6, 8 and 9 of the Central Act as they stood in the assessment year in question, i. e., 1960-61 :

Section 3. A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-

(a) occasions the movement of goods from one State to another; or

(b) is effected by a transfer of documents of title to the goods during their movement from one State to another.

Section 6. (1) Liability to tax on inter-State sales.-Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales effected by him in the course of inter-State trade or commerce during any year on and from the date so notified.

6. (2) Notwithstanding anything contained in Sub-section (1), where a sale in the course of inter-State trade or commerce of goods of the description referred to in Sub-section (3) of Section 8-

(a) has occasioned the movement of such goods from one State to another ; or

(b) has been effected by a transfer of documents of title to such goods during their movement from one State to another;

any subsequent sale to a registered dealer during such movement effected by a transfer of documents of title to such goods, shall not be subject to tax under this Act :

Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased, containing the prescribed particulars.

Section 8. (1) Every dealer, who in the course of inter-State trade or commerce,-

(a) sells to the Government any goods; or

(b) sells to a registered dealer other than the Government goods of the description referred to in Sub-section (3) ;

shall be liable to pay tax under this Act, which shall be one per cent of his turnover.

Section 8. (2A) Notwithstanding anything contained in Sub-section (1) or Sub-section (2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than one per cent (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate.

Explanation.-For the purposes of this sub-section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods.

Section 8. (3) The goods referred to in Clause (b) of Sub-section (1).-

(a) in the case of declared goods, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him;

(b) in the case of goods other than the declared goods are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power ;

(c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale;

(d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in Clause (a) or Clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in Clause (c).

Section 8. (4) The provisions of Sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner-

(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority ; or

(b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government.

Section 9. Levy and collection of tax and penalties.-(1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within dause (a) or Clause (b) of Section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of Sub-section (2), in the State from which the movement of the goods commenced :

Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within Sub-section (2) of Section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed for the purposes of Clause (a) of Sub-section (4) of Section 8 in connection with the purchase of such goods.

* * *

(3) The proceeds in any financial year of any tax, including any penalty, levied and collected under this Act in any State (other than a Union territory) on behalf of the Government of India shall be assigned to that State and shall be retained by it; and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India.

6. Now the sales in the present case are covered by Section 3(b) of the Central Act because the sales are effected by transfer of documents of title to the goods during their movement from one State to another. Under Section 9(1) of the Central Act tax on such sales can be collected by the Government of Rajasthan or Uttar Pradesh in accordance with the provisions of Sub-section (2) of Section 9 of the Central Act because they are the States from which the movement commenced. However, the learned counsel for the revenue relied upon the provisions of proviso to Section 9(1) of the Central Act and contended that as the said proviso is applicable, the State of Madhya Pradesh is competent to levy tax on the sales in question. It has, therefore, to be seen whether the proviso to Section 9(1) of the Central Act is attracted in the present case. The first part of the said proviso is applicable because the sale of the goods were during their movement from one State to another and they were sales subsequent to the first sale in respect of the same goods. It is also common ground that the sales in question do not fall within Sub-section (2) of Section 6 of the Central Act reproduced above. Had the matter rested there certainly the State of Madhya Pradesh was competent to tax the subsequent sales in question. However, as provided in the second part of the proviso tax on such sales can be levied and collected in the State of Madhya Pradesh if the assessee as a registered dealer who effected the subsequent sales obtained or could have obtained the form prescribed for the purposes of Clause (a) of Sub-section (4) of Section 8 of the Central Act in connection with the purchase of such goods. The form prescribed for the purposes of Clause (a) of Sub-section (4) of Section 8 of the Central Act is form C. The learned counsel for the assessee contended that the purpose of obtaining form C is to have the sales taxed at concessional rate under Section 8(1) of the Central Act because the provisions of Section 8(1) of the Central Act apply only if the provisions of Section 8(4) of the Central Act are complied with and the requisite form C is obtained. However, it is common ground that no sales tax was leviable on the sales of oilcakes in the States of Rajasthan and Uttar Pradesh. The learned counsel for the assessee therefore contended that it was not necessary for the assessee to have obtained form C and, therefore, the proviso to Section 9(1) of the Central Act is not attracted to the sales in question and the State of Madhya Pradesh is not competent to levy and collect sales tax on the said sales. Reliance was placed by the learned counsel for the assessee on the decision of the Madras High Court in State of Madras v. K. Nandagopal Chetty [1968] 22 STC 290. In that case the assessee transferred the documents of title to the goods which initially moved out from the State of Gujarat to the assessee under an inter-State sale within the purview of Section 3(a) of the Central Act. The sales of the goods were exempt from tax in the State of Gujarat. The assessee did not obtain form C for the seller in Gujarat certified to the assessee in form E-I. The assessee was sought to be taxed in the State of Madras. On these facts a Division Bench of the Madras High Court held that when the proviso to Section 9(1) speaks of obtaining the form prescribed for the purposes of Section 8(4)(a) in connection with the purchase of such goods it means that the C form certificate has been obtained in respect of a particular first sale of the goods. The concluding phraseology in the proviso is not used in the abstract; but since the jurisdiction is to be localised with reference to particular transactions, the form spoken of must necessarily relate to such transactions. Therefore for the application of the proviso to Section 9(1) not only the C form should be obtained from the taxing State but it should also be in connection with the purchase of the goods involved in the second sale, and that since the assessee had not issued the declarations in form C to the Gujarat seller, the proviso to Section 9(1) did not vest in the State of Madras the jurisdiction to tax the second sale.

7. The learned counsel for the department distinguished the above decision of the Madras High Court on the ground that now the language of the proviso to Section 9(1) of the Central Act has been retrospectively amended and it is provided that if the requisite form could have been obtained by the assessee the State from which such form could be obtained is competent to tax the subsequent sales and that in the present case the assessee could have obtained the C form in the State of Madhya Pradesh and therefore the proviso to Section 9(1) of the Central Act was attracted. He further placed reliance on the Statement of Objects and Reasons given for amending the proviso to Section 9(1) of the Central Act, which is as follows :

This clause seeks to substitute with retrospective effect Section 9 of the principal Act by a new section. In respect of first inter-State sale, tax will be payable in the State wherefrom the movement of the goods commenced. In the case of a second or subsequent sale not covered by Sub-section (2) of Section 6, the tax will be levied and collected in the State where the registered dealer effecting the subsequent sale has his place of business....It has also been made clear that for the purposes of assessment, collection and payment of tax, the Act will attract the procedural provisions relating to...appropriate State.

The contention of the learned counsel for the department cannot be upheld. The introduction of the words 'could have obtained' in the proviso to Section 9(1) of the Central Act does not make any difference in the present case. As stated above the purpose of obtaining form C is to have the sales taxed at concessional rate under Section 8(1) of the Central Act. If no tax was leviable on the sales of oilcakes in the States of Rajasthan and Uttar Pradesh there was no question of having the sales taxed at concessional rate and, therefore, there was no necessity of obtaining the C form as provided under Section 8(4) of the Central Act. In the circumstances, it cannot be said that the assessee could have obtained form C as prescribed under Section 8(4) of the Central Act because no purpose was to be served by obtaining such form. The Statement of Objects and Reasons also does not help the department because the language of the proviso is clear and there is no ambiguity which may be sought to be resolved by having recourse to the Statement of Objects and Reasons. Moreover, in the Statement of Objects and Reasons it is stated that the tax will be levied and collected in the State where the registered dealer effecting subsequent sales has his place of business. But the language of the proviso is not to that effect. In the circumstances, we are of the opinion that the proviso to Section 9(1) of the Central Act is not attracted to the sales in question and the State of Madhya Pradesh is not competent to levy and collect tax on such sales. Our answer to question No. (2) referred to us, therefore, is in the negative and against the department. The State of Madhya Pradesh is not competent to levy tax on the sales in question on the facts and in the circumstances of the case.

8. As regards question No. (3) the assessee did not include the sales in question in his return because according to him the State of Madhya Pradesh was not competent to tax such sales. In the circumstances, it cannot be said that the filing of the inaccurate return was accompanied by a guilty mind and therefore, as held by the Supreme Court in Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax, Indore [1980] 45 STC 197 (SC), the imposition of penalty on the assessee under Section 43(1) of the Act read with Section 9(2) of the Central Act was not justified on the facts and in the circumstances of the case. Our answer to question No. (3) therefore is in the negative and against the department.

9. The reference is answered accordingly. In the circumstances of the case the parties shall bear their own costs of this reference.


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