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Arun Associates Vs. Commissioner of Sales Tax and Others - Court Judgment

LegalCrystal Citation
Subject Sales Tax
CourtDelhi High Court
Decided On
Case NumberCivil Writ Petition No. 426 of 1985
Judge
Reported in[1986]63STC368(Delhi)
ActsDelhi Sales Tax Act, 1975 - Sections 4(2) and 40
AppellantArun Associates
RespondentCommissioner of Sales Tax and Others
Excerpt:
sales tax - assessment - section 40 of delhi sales tax act, 1975 and rules 7(3) and 40 of delhi sales rules, 1975 - condition for applicability of rule 7 (3) - two conditions must be fulfillled - application must be made within 30 days of circumstances leading to loss - loss must take place at place of business. - - records the burning of the goods as well as the records consisting of account books, st-1 forms and c forms of both dealers. (3) notwithstanding anything contained in sub-rule (1) if the commissioner on an application made by a dealer and after making such enquiries as he may consider necessary, is satisfied that the dealer is not a position to furnish all or any of the declaration referred to in sub-rule (1) above on account of loss of such declaration or declarations..........model town, delhi, from 1976. 3. according to the petition, from 27th may, 1982, an additional place of business was opened by the petitioner at 2820/17, gurunanak auto market, kashmere gate, delhi, where another dealer, m/s. mehta auto agencies, was also carrying on similar business. 4. on opening the additional place of business, the petitioner was required by section 40 of the delhi sales tax act, 1975, to send information within the prescribed time to the prescribed authority. the relevant rule dealing with this is rule 34 of the delhi sales tax rules, 1975. the relevant portions of this rule are : '34. information to be furnished regarding change of business, etc. - (1) the information under section 40 shall be furnished to the appropriate assessing authority within thirty days.....
Judgment:
ORDER

D.K. Kapur, J.

1. This writ petition was heard after a show cause notice was issued. We issued rule D.B., and proceeded to hear the matter as it was a short one.

2. The petitioner is a proprietary concern dealing in the resale of motor parts and accessories. The business was carried on at the residential address of the petitioner at B-3/13, Model Town, Delhi, from 1976.

3. According to the petition, from 27th May, 1982, an additional place of business was opened by the petitioner at 2820/17, Gurunanak Auto Market, Kashmere Gate, Delhi, where another dealer, M/s. Mehta Auto Agencies, was also carrying on similar business.

4. On opening the additional place of business, the petitioner was required by section 40 of the Delhi Sales Tax Act, 1975, to send information within the prescribed time to the prescribed authority. The relevant rule dealing with this is rule 34 of the Delhi Sales Tax Rules, 1975. The relevant portions of this rule are :

'34. Information to be furnished regarding change of business, etc. -

(1) The information under section 40 shall be furnished to the appropriate assessing authority within thirty days of the occurrence of an event referred to therein.

(2) If the information under section 40 relates to a branch of any business located outside the jurisdiction of any appropriate assessing authority, the information shall be forwarded by the dealer to the other appropriate assessing authority within whose jurisdiction the branch is situate ........'

According to the writ petition, this information was furnished to respondent No. 3, the Sales Tax Officer, Ward No. 42, behind M.S. Building, I.P. Estate. After verification by the Sales Tax Inspector, a new certificate of registration in form ST-9 was issued bearing No. 001915/A in lieu of the old certificate No. 003616.

According to the petitioner, there was a fire at the new place of business on 31st May, 1982, at 11-55 P.M., in the night, and various documents have been filed about the fire including the F.I.R. filed at the Police Station, Kashmere Gate, and the certificate issued by the Chief Fire Officer of the Delhi Municipal Corporation. The certificate relates to both M/s. Mehta Auto Agencies and Shri Arun Kumar, Proprietor, M/s. Arun Associates. According to the writ petition, the F.I.R. records the burning of the goods as well as the records consisting of account books, ST-1 forms and C forms of both dealers.

If such a situation arises, i.e., there is a fire or other destruction, then rule 7 of the Delhi Sales Tax Rules, 1975, provides a procedure. That rule reads :

'7. Conditions subject to which a dealer may claim deduction from his turnover on account of sales to registered dealers. - (1) A dealer who wishes to deduct from his turnover the amount in respect of sales on the ground that he is entitled to make such deduction under the provisions of sub-clause (v) of clause (a) of sub-section (2) of section 4, shall produce -

(a) copies of the relevant cash memos or bills according as the sales are cash sales or sales on credit; and

(b) a declaration in form ST-1 duly filled in and signed by the purchasing dealer or a person authorised by him in writing :

Provided that no single declaration in form ST-1 shall cover more than one transaction of sale except in cases where the total amount of sales made in a year covered by one declaration is equal to or less than Rs. 30,000.00 or such other amount as the Commissioner may, from time to time, specify in this behalf in the Official Gazette.

Provided further that where, in the case of any transaction of sale, the delivery of goods is spread over different years it shall be necessary to furnish a separate declaration in respect of goods as delivered in each year.

(2) The declaration in form ST-1 shall be furnished by the selling dealer to the appropriate assessing authority up to the time of assessment by it.

(3) Notwithstanding anything contained in sub-rule (1) if the Commissioner on an application made by a dealer and after making such enquiries as he may consider necessary, is satisfied that the dealer is not a position to furnish all or any of the declaration referred to in sub-rule (1) above on account of loss of such declaration or declarations due to the fire or flood beyond the control of the dealer, and that the application of sub-rule (1) will cause undue hardship to the dealer, he may by an order in writing exempt such dealer from furnishing such declaration or declarations, subject to the conditions as are herein below mentioned and to such further conditions as may be specified by the Commissioner in the order.

CONDITIONS

1. That the application is made within 30 days of the event, i.e., fire or flood, as the case may be, stating the facts and circumstances in which the loss took place and also stating the evidence on which he relies in support of such facts. The application shall be duty signed and verified by the dealer in the manner as is provided in respect of returns.

2. That the loss had taken place at the place of business of the dealer.'

5. The important part of this rule, as far as the present case is concerned, is the situation which occurs when there is a loss of the declaration forms due to fire or flood. The conditions prescribed at the end of the above-quoted rule are that the application has to be made within 30 days of the event, i.e., the fire or flood, and that the loss must take place at the place of business of the dealer. The peculiar feature of the present case is that the alleged fire took place on 31st May, 1982, whereas the place of business, according to the petition, was occupied on 27th May, 1982. The information regarding this new place of business was furnished on 5th June, 1982, which means that the fire had already taken place before the information regarding the new place of business reached the relevant authority. When the case of the petitioner was considered by the Commissioner of Sales Tax, he passed an order on 30th March, 1984, to the effect that the conditions under rule 7(3) were not made out. The reasoning of the Commissioner, Sales tax, was as follows :

'It appears that the dealer in order to cover itself moved an application for amendment of the R.C. and the application though dated 27.5.1982 was in fact received in the Ward on 5.6.1982, i.e., a week after the event of fire had broken out. I am not convinced that the dealer fulfillled the conditions of rule 7(3) and that it was not the place of his business when fire took place. The application of the dealer is, thereforee, rejected since it does not fulfill the requirement of law.'

6. This order related to five assessment years 1978-79 to 1982-83, so five appeals were taken to the Appellate Tribunal which decided the appeals on 10th December, 1984. The Tribunal also rejected the appeals holding as follows :

'This is an admitted fact that fire broke out on 31.5.1982. This is also an admitted fact that application for amendment for R.C. was received in the Ward on 5.6.1982. i.e., after the fire broke out. The contention of the learned counsel for the appellant is that the application was sent by him under postal certificate on 27.5.1982 and as such this date should be taken as the date of his application. The contention of the learned counsel for the appellant cannot be accepted on the short ground that post office is the agent of the dealer and if there is a delay by the post office in delivering the application in time, the department cannot be held responsible for the same. The appellant could be more careful in taking application to the office of the Sales Tax personally or by special messenger. As the application reached the Ward on 5.6.1982, the amendment in the R.C. w.e.f. 27.5.1982 is totally wrong and illegal.

In view of the above, I am convinced that the dealer has not fulfillled the condition of rile 7(3) of the Delhi Sales Tax Rules, 1975.'

7. One other material fact has to be mentioned, which is that in the case of M/s. Mehta Auto Agencies, which was in the same premises, the assessed's case was accepted and that assessed was given the benefit of rule 7(3).

8. The assessed then moved this Court for the issue of a writ on which a show cause notice was issued. The opposition to the writ petition is in the form of an affidavit. First, it is claimed that as there is an order of the Appellate Tribunal, Sales Tax, there is an alternative remedy by way of a reference and this Court should not exercise the writ jurisdiction in view of the existence of an alternative remedy. The other objection is that the questions of fact re involved, which cannot be made the subject-matter of a writ petition.

9. To our way of thinking, a very simple question is involved. The petitioner had 30 days time to intimate the charge, i.e., to indicate that a new place of business had been opened. That 30 days time is granted to him by the combined operation of section 40 read with rule 34. Section 40(b) states that if a dealer discontinues his business or charges his place of business or warehouse or opens a new place of business, he has to intimate the prescribed authority within the prescribed time. The time and the prescribed authority are specified in rule 34. When the petitioner opened a new place of business on 27th May, 1982, he could intimate this fact within 30 days. The authorities under the Act have rejected the application on the ground that the information reached the authority on 5th June, 1982, which was after the fire. This is immaterial as the period of 30 days had not expired, so the application could not be rejected on this ground, i.e., on the ground that it was received after the fire took place. Then, there is the fact that the registration certificate was altered by the authority concerned by including this additional place of business in the certificate of registration. This is indicated in the copy of the registration certificate, the photostat of which registration certificate has been filed in this Court as annexure P-1. At the same time, intimation of this fire had to be given within 30 days and there is no doubt that this intimation was given within time.

10. There are only two conditions set out in rule 7 - (a) the application must be made within 30 days of the fire or flood, as the case may be, stating the facts and circumstances is which the loss took place, and (b) the loss must take place at the place of business. No doubt, the first condition is satisfied. The second condition has to depend on whether the fire took place at the place of business of this dealer. No doubt, the information regarding this new place of business was received by the assessing authority after the fire, but within the statutory period. It was a matter of pure chance that the fire took place shortly after the additional place of business was opened. But this should not affect a construction of the conditions set out in rule 7.

11. We fail to understand how the Commissioner, Sales Tax, or the Appellate Tribunal have held that the conditions of rule 7(3) were not fulfillled. This apparently was based solely on the consideration that the intimation of the new place of business reached the office on 5th June, 1982, a few days after the fire.

12. The test of determining whether factually the place of business was there or not could be found from the report to the police which is annexure P-2, which states that the petitioner had closed the shop and then it had caught fire, in which various documents, cash book, ledgers, ST-1 forms and C forms had been burnt along with some goods. There is also a document, annexure P-3, which is a letter from the Chief Fire Officer showing that a fire had broken out at premises No. 2820/17.

13. The order regarding M/s. Mehta Auto Agencies accepting that the conditions in rule 7(3) stood fulfillled is annexure P-4.

14. Learned counsel for the department urged that this petition is not maintainable because an alternative remedy existed by way of a reference. We are doubtful if such an alternative remedy actually exists because the same depends on whether a question of law arises out of the Tribunal's order. The Tribunal has merely rejected the appeals on the ground that the conditions of rule 7(3) are not made out on the facts. This could easily be treated as a finding of fact, so there may not be an alternative remedy. We also note that the assessment orders in this case have been passed for several years according to 'best judgment' as books of account have not been produced. It has not been accepted that the books of account were burnt in the fire. So, the assessed would be faced with a finding of fact both on the merits of the assessments as well as on the question whether deduction can be allowed under ST-1 forms.

15. We consider the matter to be too serious, i.e., there is a fire and there is an intimation. There is also a change in the registration certificate indicating that the additional place of business has been accepted by the department. Yet, the assessed has not got the benefit of the loss due to fire. In such circumstances there is no real alternative remedy open to the petitioner. We, thereforee, cannot refuse to exercise jurisdiction under article 226 of the Constitution.

16. The next point urged for the respondents is that the petitioner has wrongly stated that his ST-1 forms were burnt in the fire. For this purpose, a reference was made to copies of the assessment orders which showed that ST-1 forms were produced by the dealer. A rejoinder affidavit has been filed stating that only those ST-1 forms were produced which were received after the fire took place. It is difficult for us to determine which ST-1 forms were burnt and which survived or why the petitioner was able to produce some forms and not other forms. Learned counsel for the respondents submitted that the case of the petitioner was a bogus one because if all ST-1 forms were burnt then none could have been produced for earlier years. These forms must have been received earlier. We were shown some of the ST-1 forms actually produced by the petitioner at the hearing, but we were unable to ascertain if they had been received by the petitioner after the fire or before the fire. This is so because no date is indicated on them. It appears the practice for these ST-1 forms to be sent to the concerned dealer as and when required by that dealer. These forms have to be supplied by the purchasing registered dealer, but there does not appear to be any requirement that they should be supplied within a particular period. The documents examined by us were not sufficient to refute the petitioner's case to the effect that the form he had earlier were destroyed in the fire and the ones he received later were produced before the sales tax authorities at the time of assessment.

17. We are thus left with only one question for determination, i.e., whether the petitioner was right in saying that he had opened a new place of business on 27th May, 1982. If he had a place of business at 2820/17, Gurunanak Auto Market, Kashmere Gate, then the fire which admittedly took place there on 31st May, 1982, could undoubtedly have resulted in the destruction of documents as alleged by the petitioner. The same premises were occupied by M/s. Mehta Auto Agencies in whose case the factum of fire was accepted and benefit under rule 7(3) was given. We have considered the various possibilities - (a) the petitioner had opened a new place of business where a fire took place on 31st May, 1982, leading to the destruction of his declaration forms and account books, and (b) the petitioner never had a new place of business but taking advantage of the fire in the premises of M/s. Mehta Auto Agencies, made a report to the police on the night of 31st May, 1982, as well as made an application for change of the registration certificate which reached the concerned officials on 5th June, 1982. These two possibilities are certainly both possible. The question is which of these two possibilities is the true one. Certainly, the question which is the true one of these two possibilities cannot depend on the date when the application for amendment of the registration certificate was received under rule 34 read with section 40. Rather, the answer must depend on whether the petitioner had moved his place of business to 2820/17, Gurunanak Auto Market, Kashmere Gate, on 27th May, 1982. In this connection, the statement of the petitioner, Shri Arun Kumar, made before the police shortly after the fire seems to be quite materials. This statement was made on 1st June, 1982. It states :

'I am dealing in motor spare parts, from 2820/17, Gurunanak Auto Market, under the style of M/s. Arun Associates. Yesterday evening I, in routine closed my shop and went. Today at about 10, I came to know that my shop has caught fire and found that all the stocks and papers, cash book, ledgers, ST-1 forms 192815 to 192820, and C forms and entire goods have turned into ashes. I do not have doubts about the fire on anybody and I do not want any police action. I do not know how this fire broke.'

18. This is the translation furnished by the petitioner from the original Hindi. It is also attested by Ranbir Singh, A.S.I., P. S. Kashmere Gate. There can be no doubt that this statement was recorded and it is noteworthy that it gives the numbers of ST-1 forms which have been burnt.

19. On the other hand, the certificate of the Delhi Fire Brigade was issued on 11th June, 1982. It merely states that a fire broke out in the premises of M/s. Mehta Auto Agencies and affected the spare parts and records. This does not state that the premises of M/s. Arun Associates were burnt, but the letter is addressed to Shri Arun Kumar, M/s. Arun Associates, Bodenbel Hotel, near Police Station, 2820/17, Kashmere Gate, Delhi. So, the number of the premises is the same as that where the fire took place.

20. Though we are inclined to accept the fact that the petitioner must have opened a place of business at 2820/17, Gurunanak Auto Market, Kashmere Gate, otherwise he could not possibly make a report to the police about the destruction of his documents or got a change in the Registration Certificate showing that he had opened a place of business at 2820/17, Gurunanak Auto Market. These facts could be refuted by obtaining some plausible material. This material could be in the form of the statement of neighbours or the owner of the building or even the statement from M/s. Mehta Auto Agencies who were sharing the same premises. No such material is forthcoming in the counter-affidavit. It thus appears that the petitioner did move to the premises at 2820/17, Gurunanak Auto Market. A further confirmation of this fact is to be found from the report regarding the fire which shows that only a small area of the premises was affected which measured 1 Mt. x 2 Mt. Thus, after the receipt of the intimation under section 40, which was received by the concerned official on 5th June, 1982, the registration certificate was changed with effect from 27th May, 1982. Thus, it is not open to the sales tax authorities to reject the change in the certificate merely on the ground that the intimation was received on 5th June, 1982.

21. In this connection, there is one rule which is quite important and that is rule 16 regarding applications for registration. There are two forms appearing at the end of the rule. Form ST-8 is the certificate of registration for a dealer having only one place of business and form ST-9 is a certificate of registration for a dealer having more than one place of business. Originally, the petitioner had only one place of business, so the registration certificate was in form ST-8. After the additional place of business had been intimated, this certificate was altered to one in ST-9. In this form there is a place for specifying the additional places of business and warehouses. Thus, we must take it for granted that the petitioner had moved to 2820/17, Gurunanak Auto Market, Kashmere Gate, and the change by issue of a new certificate of registration in form ST-9 was made by the assessing authority. It thus could not be said that the petitioner had no place of business at 2820/17, Gurunanak Auto Market, Kashmere Gate, on the date of the fire.

22. That being the position, the petitioner is entitled to a writ in this case. We accordingly issue a writ directing the respondents-sales tax authorities to act on the basis that the petitioner is entitled to the benefit of rule 7(3) and thus the orders of the Sales Tax Commissioner and the Tribunal holding otherwise have to be quashed. The respondents are now directed to give effect to this conclusion by making appropriate changes in the assessment orders on the basis the rule 7(3) does apply to the petitioner. The petitioner will get costs.

23. Petition allowed.

4(2)

40

40(b)


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