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Charanjit Lal Des Raj Vs. the Sales Tax Tribunal, U. T. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtPunjab and Haryana High Court
Decided On
Case NumberG.S.T. Ref. No. 30 of 1973
Judge
Reported in[1977]40STC361(P& H)
AppellantCharanjit Lal Des Raj
RespondentThe Sales Tax Tribunal, U. T.
Appellant Advocate R.N. Narula, Adv.
Respondent Advocate Anand Swarup and; M.L. Bansal, Advs.
Cases ReferredCharanjit Lal Des Raj v. Sales Tax Tribunal
Excerpt:
.....language of the abovesaid provision, the act of the petitioner would clearly come within the mischief of clause (d) quoted above. the conduct of the petitioner, therefore, clearly was an offence under section 10(d) and was punishable with both imprisonment and fine. clearly the petitioner derived the benefit of the notification issued by the state of haryana and by violating the terms thereof carried the goods to the state of punjab via chandigarh without the payment of any tax whatsoever. sub-section (5) of section 8 of the act only clothes the state government with the power to issue a notification exempting the goods from the central sales tax altogether or reducing the incidence thereof, if certain conditions are satisfied......the union territory of chandigarh who purchases certain goods for sale from a registered dealer of haryana state after issuing a declaration in form e (prescribed by haryana state government vide its notification no. s.o. 41/c.a. 74/56/s-8/67 dated 2nd may, 1967) to the said dealer commits an offence under the central sales tax act, 1956, or the rules or notifications made thereunder when he transfers the said goods for sale beyond the union territory of chandigarh to his branch offices or head offices in the state of punjab or in any other state of the union of india ?(2) whether the breach of the conditions of the abovesaid haryana state government's notification is covered under section 10(d) of the central sales tax act, 1956, for which a penalty can be imposed upon the purchasing.....
Judgment:

S.S. Sandhawalia, J.

1. In the Sales Tax Case No. 3 of 1972 Charanjit Lal Des Raj v. Sales Tax Tribunal, Union Territory, Chandigarh [1974] 33 S.T.C. 271 preferred at the instance of the present petitioner, the Division Bench recorded the following operative order on 23rd April, 1973 :

This petition is, therefore, allowed and the Sales Tax Tribunal, Chandigarh, is directed to decide the application of the petitioner under Section 22(1) of the Punjab Act made to it on merits and if any question or questions of law is/are found to arise out of its order, that question or those questions may be referred to this court after drawing up a proper statement of the case. Since the matter was not free from difficulty, the parties are left to bear their own costs.

2. In pursuance thereto, the Tribunal rather curiously has referred as many as 11 questions for determination by its referring order dated 16th October, 1973.

3. The facts are not in dispute and lie in a narrow compass. The petitioner-firm of Messrs. Charanjit Lal Des Raj is carrying on business in kerosene oil and lubricants and is a registered dealer both under the Punjab General Sales Tax Act and the Central Sales Tax Act. The petitioner-firm purchased goods free of sales tax to the tune of Rs. 2,40,293.39 from registered dealers of Haryana by furnishing the requisite declaration prescribed in the Haryana Government Notification No. S.O.41/C.A.74/56/S-8/ 67 dated 2nd May, 1967, issued under Section 8(5) of the Central Sales Tax Act. These purchases were made subject to the condition expressly specified in the notification that the goods so sold by the registered dealers of Haryana were meant for consumption or utilisation within the Union Territory of Chandigarh exclusively. However, in obvious violation of that condition, the petitioner-firm transferred these goods to its branches at Khanna and Doraha in the State of Punjab. The Assessing Authority by order dated 20th July, 1971 (annexure A), came to the conclusion that sufficient cause had not been shown for putting the goods aforesaid to a use different than that for which they were purchased and, consequently, imposed a penalty of Rs. 7,500 under Section 10A of the Central Sales Tax Act, 1956. An appeal to the Deputy Excise and Taxation Commissioner and later a second appeal before the Sales Tax Tribunal of the Union Territory of Chandigarh were both unsuccessful. The petitioner-firm thereupon moved a petition under Section 22 of the Punjab General Sales Tax Act read with the Central Sales Tax Act for referring ten questions of law to the High Court, but by its order dated 27th June, 1972, the Tribunal held that the petition was not competent. The petitioner then moved this court in Sales Tax Case No. 3 of 1972 [1974] 33 S.T.C. 271, mentioned earlier and that is how the matter is now again before us.

4. It is apparent from the referring order of the Tribunal dated 16th October, 1973, that it has slightly misapprehended the import of the earlier order of the High Court in Sales Tax Case No. 3 of 1972 [1974] 33 S.T.C. 271. Therein the Bench had obviously directed that if any question or questions of law were found to arise then these may be referred to the court after drawing up a proper statement of the case. The Tribunal, however, has construed this direction as if it was a mandamus requiring it to forward all the eleven questions which the petitioner had earlier prayed to be referred. It has been simply noticed that the representative of the department had no objection to the reference to all the questions of law mentioned by the petitioner in his application to this court and, accordingly, a blanket reference of these have been made.

5. Learned counsel for the petitioner has very fairly conceded that indeed all these eleven questions do not in fact arise from the order of the Tribunal and in any case are repetitive and tautologous. Both the learned counsel for the parties have, therefore, agreed that the following three questions adequately cover the questions of law which arise and have prayed that these may be answered in this reference :

(1) Whether a registered dealer of the Union Territory of Chandigarh who purchases certain goods for sale from a registered dealer of Haryana State after issuing a declaration in form E (prescribed by Haryana State Government vide its Notification No. S.O. 41/C.A. 74/56/S-8/67 dated 2nd May, 1967) to the said dealer commits an offence under the Central Sales Tax Act, 1956, or the Rules or notifications made thereunder when he transfers the said goods for sale beyond the Union Territory of Chandigarh to his branch offices or head offices in the State of Punjab or in any other State of the Union of India ?

(2) Whether the breach of the conditions of the abovesaid Haryana State Government's notification is covered under Section 10(d) of the Central Sales Tax Act, 1956, for which a penalty can be imposed upon the purchasing dealer of the Union Territory of Chandigarh under Section 10A of the said Act ?

(3) Whether the Assessing Authority (Sales Tax), Union Territory, Chandigarh, has jurisdiction to impose any penalty under Section 10A of the said Act on a registered dealer of the Union Territory of Chandigarh who has committed a breach of the conditions of the said notification issued by the Haryana Government ?

6. We propose to examine questions Nos. (1) and (2) together because the central points at issue in both of them are similar, if not identical.

7. To put things in the correct perspective, it is both desirable and indeed necessary to have a bird's eye view of the relevant provisions of the Central Sales Tax Act, which are attracted in the present case. A reading of Sub-sections (1) and (3) of Section 8 would show that every dealer who in the course of inter-State trade sells to a registered dealer (other than the Government) goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale or for the purpose of use by him in the manufacture or processing of goods, etc., is liable to pay tax at the prescribed rate under the Act. However, Sub-section (5) of the same section empowers the State Government if it is satisfied that it is necessary so to do in the public interest to direct that no tax shall be payable on goods or classes of goods specified in the notification to be issued to this effect or that such a tax shall be calculated at rates lower than those prescribed by Section 8 itself. Acting under the aforesaid provisions, the State of Haryana issued notification dated 2nd May, 1967 (hereinafter called the notification), whereby the Central sales tax was entirely exempted in respect of certain sales subject to the condition that the goods so sold were meant for consumption or utilisation in the Union Territory of Chandigarh. It was required thereby that the selling dealer should produce before the Assessing Authority concerned a declaration duly filled in by the purchasing dealer in a form prescribed in the said notification itself.

8. Section 10 of the Act then elucidates the offences which may be punishable with simple imprisonment extending to six months or with fine or with both. Clause (d) of Section 10 of the Central Sales Tax Act, which is attracted in the present case, provides that if any parson after purchasing any goods for any of the purposes specified in Clause (b) of Sub-section (3) of Section 8 fails, without reasonable excuse, to make use of the goods for any such purpose, he shall become liable to imprisonment or fine under this provision. In Section 10A of the Act, which has been inserted with effect from 1st October, 1958, it is provided that the competent authority may in lieu of prosecution for an offence committed under the Act impose a penalty for a sum not exceeding one-and-a-half times the tax which would have been levied under the Act in respect of the sale if the offence had not been committed.

9. Now, in the present case, on the admitted facts, it is plain that the petitioner secured the benefit under the notification by purchasing the goods at Ambala in the State of Haryana without the payment of any tax but patently violated the condition attached thereto that those goods should be consumed or utilised within the Territory of Chandigarh. It is not in dispute that the petitioner-firm transferred the said goods out of Chandigarh to its branches in the State of Punjab and thereby avoided the payment of tax which would have normally and plainly become leviable, if those branches had purchased goods directly in the State of Haryana. The sole issue, therefore, is whether this infraction and violation of the terms and conditions laid out in the said notification would be an offence under the Central Sales Tax Act.

10. To my mind, it would plainly be so. The notification issued under the authority of Section 8(5) of the Act in the clearest terms provided for the purpose for which goods had to be sold in order to claim the benefit of exemption of tax provided thereby. When the petitioner violated the terms and conditions spelled out in that notification, he, in effect, infracted the relevant provisions of the Central Sales Tax Act itself. Section 8(3)(b) specifies and describes the goods which are taxable under the Act when a dealer in the course of inter-State trade or commerce sells the same to a registered dealer other than the Government. In the eye of law, therefore, the goods purchased by the petitioner fell within Section 8(3)(b) of the Act and a condition was imposed thereupon regarding the use to which these goods were to be put. The petitioner plainly violated the purposes for which the purchase had been made and the benefit of the exemption secured. His conduct, therefore, would come plainly within the relevant words of the statute which may now be quoted in extenso:

10. Penalties.-If any person-....

(d) after purchasing any goods for any of the purposes specified in Clause (b) of Sub-section (3) of Section 8 fails, without reasonable excuse, to make use of the goods for any such purpose;....

he shall be punishable with simple imprisonment which may extend to six months, or with fine, or with both; and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues.

11. On the plain language of the abovesaid provision, the act of the petitioner would clearly come within the mischief of Clause (d) quoted above. No reasonable excuse for making use of the goods for the purpose other than that for which they were purported to have been purchased under the notification has been reasonably made out and, in fact, none has even been pleaded. The conduct of the petitioner, therefore, clearly was an offence under Section 10(d) and was punishable with both imprisonment and fine. Once that is so, the complementary provisions of Section 10A are at once attracted and the competent authority is entitled to impose a penalty in lieu of a prosecution for the committed offence. In the present case, the petitioner has been only penalised and, admittedly, not charged in a criminal court.

12. Mr. R. N. Narula for the petitioner had raised rather a facile argument to the effect that only the selling dealer at Ambala in the State of Haryana was liable for the infraction of the notification and not the petitioner. I am of the view that this specious contention deserves only to be noticed and rejected. Clearly the petitioner derived the benefit of the notification issued by the State of Haryana and by violating the terms thereof carried the goods to the State of Punjab via Chandigarh without the payment of any tax whatsoever. The infraction and the violation of the law has patently been committed by the petitioner and one fails to see how and for what the innocent selling dealer in Haryana (who had sold the goods against the prescribed declaration duly given by the petitioner) could be charged with a criminal offence.

13. An equally untenable contention raised on behalf of the petitioner then is that the infraction of the law here would not be Section 8(3)(b) of the Act, but of Sub-section (5) thereof. I am wholly unable to agree. Sub-section (5) of Section 8 of the Act only clothes the State Government with the power to issue a notification exempting the goods from the Central sales tax altogether or reducing the incidence thereof, if certain conditions are satisfied. The charging provisions of the section for the purposes of the present case are plainly Sub-sections (1) and (3), which specified the nature of the goods which are taxable and the incidence and the rate of taxation therefor. The admitted violation of the notification under which the petitioner had purchased the goods thus falls amply within Section 10(d) of the Act, which is the relevant provision. Therefore, the answer to questions Nos. (1) and (2) must necessarily be in the affirmative.

14. Learned counsel for the petitioner would hardly raise any cogent argument regarding the issue covered by question No. (3). The very statute itself provides that penalty has to be imposed by the authority who granted to him the certificate of registration or in any case is competent to grant the same. In the present case, there does not appear to be any manner of doubt that the Assessing Authority (Sales Tax) of the Union Territory of Chandigarh was the authority which had issued the certificate of registration to the petitioner. Consequently, question No. (3) has also to be answered in the affirmative.

15. In the light of the aforementioned discussion, all the three questions are answered as above in favour of the revenue and against the petitioner. The parties will, however, bear their own costs.


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