1. Though the statement of case furnished by the Sales Tax Tribunal is very lengthy, the facts necessary for the decision of this case and the question which arises are within a very short compass.
2. The matter relates to the sales tax assessment under the Central Sales Tax Act of M/s. Delhi Automobiles (P.) Ltd. (hereinafter referred to as the 'selling dealer'). The selling dealer sold 12 trucks to M/s. Tosh Metal and Alloy Industries (P.) Ltd., Karnal (hereinafter referred to as the 'purchasing dealer'). The total sale price was Rs. 3,59.497.38 and these sales have been assessed at the rate of 10 per cent, rejecting the claim of the selling dealer that he was entitled to the concessional rate of tax provided in section 8 of the Central Sales Tax Act. The ground on which the assessed's claim was rejected was that the relevant C forms issued by the purchasing dealer had not been produced. Though originally the controversy between the parties related to the 12 transactions, it has now transpired that so far as 4 transactions are concerned the assessed was not able to show that any C forms had at all been issued by the purchasing dealer and these transactions are no longer in issue before us. But in respect of the remaining 8 transactions details of which have been given on page 2 of the order of the Additional District Judge (who disposed of the revision petition against which this reference has been made), the position is somewhat different and we are concerned only with these 8 transactions, the total sale proceeds in respect of which comes to Rs. 2,41,555.68.
3. These 8 transactions are said to have taken place on 10th June, 1968, 26th June, 1968, and 28th August, 1968. By the time the assessment was made and the further proceedings took place the purchasing company had gone into liquidation. But the assessed was able to ascertain from the liquidator of the said company the information that the records of the company pertaining to the Karnal branch indicated purchases from the assessed-company and that eight sales tax C forms dated 12th February, 1969 (and not 14th February, 1969, as mentioned in the letter to the official liquidator), had been issued by the purchasing company against the relevant bills of the petitioner-company, Thereupon the assessed made a petition to the High Court of Calcutta for directions to the official liquidator to issue duplicates of these C forms which according to the petitioner-company had not been received by it. On 21th March, 1974, the company Judge of the Calcutta High Court passed an order directing that the assessed-company may be allowed to take photostat copies at its own cost of the counterfoils of the 8 sales tax declaration forms available in the purchasing company's records. In pursuance of this order the petitioner-company obtained these photostat copies of the counterfoils of C form declarations dated 12th February, 1969. The learned Additional District Judge has accepted the furnishing of these photostat copies as sufficient compliance with rule 12(3) of the Central Sales Tax (Registration and Turnover) Rules and as entitling the petitioner-company to the concessional rate of tax in respect of the above eight sales to the purchasing dealer. However, the learned Additional District Judge also directed by way of abundant caution that the petitioner-company should furnish an indemnity bond to the Sales Tax Officer indemnifying the Government against any loss of revenue by the user of the said C form declarations which had been lost to the extent of the loss of revenue occasioned to the department by the loss of the originals, if any.
4. It is at the request of the Commissioner of Sales Tax that the following question has been referred to us for decision under section 45 of the Delhi Sales Tax Act, 1975 :
'Whether, on the facts and in the circumstances of the case, the Additional District Judge was justified in directing the notified authority to accept the photostat copies of the counterfoils of the declaration in form C of the turnover of Rs. 3,59,497.38 in respect of the sales stated to have been made by the respondent in the course of inter-State trade and commerce ?'
5. We may here point out that in view of the facts clarified earlier the question before us is confined to 8 transactions involving a turnover of Rs. 2,41,555.68 covered by the eight cases in which photostat copies were furnished by the petitioner-company. The question may be treated as modified accordingly.
6. At first sight it appears that the order of the learned Additional District Judge is a very equitable and fair order in the circumstances of the case particularly because there is no suggestion anywhere that there is anything wrong with the genuineness of the transactions or any doubts as to the possession by the purchasing dealer of a certificate enabling the sellers to obtain the concessional rate of tax under section 8 of the Act. But Sri R. C. Chawla, the learned counsel for the applicant, points out that the question involved is a pure question of law as to the proper interpretation of the provisions of section 8 of the Central Sales Tax Act and the provisions of rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957. He submits that, in view of the decision of the Supreme Court in the case of Kedarnath Jute . v. Commercial Tax Officer : 3SCR626 it is clear that these provisions have to be construed strictly and that unless there is a strict compliance with the provisions of the statute the assessed was not entitled to the concessional rate of tax. He submits that a liberal construction was not justified having regard to the scheme and object of the Act and the Rules in this regard and that if there was any hardship it was for the legislature to take appropriate action to make suitable provisions in that regard.
7. Section 8(1) of the Central Sales Tax Act, 1956, lays down, inter alia, that every dealer who, in the course of inter-State trade or commerce 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 the Act at 3 per cent (subsequently altered to 4 per cent) of his turnover. There is no dispute that in this case the purchasing dealer was a registered dealer nor is there any dispute that the goods were of the description covered by sub-section (3). We have however to reckon with sub-section (4) which in so far as is relevant reads as follows :
'(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
8. Stopping here it will be clear that a dealer will not be entitled to the concessional rate of tax in respect of inter-State sales made by him unless he produced the declaration referred to in clause (a) of sub-section (4) stated above. The form of this declaration has been prescribed by rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957. Sub-rule (1) of rule 12 stipulates that the declaration should be in form C prescribed there under. Form C is a declaration divided into three parts with identical contents. The first part is the counterfoil. The second part is the duplicate and the third part is described as the original. This form contains, apart from the name of the purchasing dealer, his registration number, the date from which his registration is valid, and a certificate by him that the goods purchased from a particular dealer (details of which are to be given) are required for resale or use in manufacture or processing of goods for sale, etc., and are covered by the registration certificate issued to him under the Central Sales Tax Act. It has to bear the signature and status of the person signing the declaration and also the name and address of the seller and the State to which he belongs. The form itself makes it clear that the counterfoil is to be retained by the purchasing dealer. The duplicate is to be handed over to the selling dealer and the original is also to be handed over to the selling dealer in order to enable him to file the same before the sales tax authorities from whom he claims a deduction in respect of the sale covered thereby. We shall refer to the provisions of the Central Sales Tax (Delhi) Rules which govern the issue as well as the utilisation of these forms. But before doing so we may extract the provisions of sub-rules (2) and (3) of rule 12 which make a specific provision regarding cases where a form of declaration is lost :
'(2) Where a blank or duly completed form of declaration is lost, whether such loss occurs while it is in the custody of the purchasing dealer or in transit to the selling dealer, the purchasing dealer shall furnish in respect of every such form so lost an indemnity bond to the notified authority from whom the said form was obtained, for such sum as the said authority may, having regard to the circumstances of the case, fix. Such indemnity bond shall be furnished by the selling dealer to the notified authority of his State if a duly completed form of declaration received by him is lost, whether such loss occurs while it is in his custody or while it is in transit to the notified authority of his State.
(3) Where a declaration form furnished by the dealer purchasing the goods or the certificate furnished by the Government has been lost, the dealer selling the goods may demand from the dealer who purchased the goods or, as the case may be, from the Government, which purchased the goods, a duplicate of such form or certificate, and the same shall be furnished with the following declaration recorded in red ink and signed by the dealer or authorised officer of the Government, as the case may be, on all the three portions of such form or certificate, -
I hereby declare that this is the duplicate of the declaration form/certificate No. .......... signed on ......... and issued to ............... who is a registered dealer of .............. (State) and whose registration certificate number is ................''
9. On the strength of the above sections and the rules the argument addressed on behalf of the applicant is that the production of a declaration form or in case the declaration form is lost the production of duplicates containing both the original and the duplicate parts of the form originally issued with the superimposition of a declaration in red ink as mentioned in sub-rule (3) is a sine qua non for the grant of concession to the assessed under section 8(1) of the Act. The argument in short is that the provision for the production of the declaration form or a duplicate form in the manner contemplated by rule 12 is a mandatory provision of which there should be strict compliance. This argument of the learned counsel is fully supported by the decision of the Supreme Court in Kedarnath Jute . v. Commercial Tax Officer : 3SCR626 , referred to earlier. That was a case where the selling dealer claimed a deduction under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941, in respect of sales made by him to a registered dealer. Section 5(2)(a)(ii) exempted from the taxable turnover all sales to a registered dealer of certain classes of goods specified in the certificate of registration of a purchasing dealer as being intended for the purpose mentioned therein. But the said exemption was made subject to a proviso under which in the case of such sales a declaration form duly filled up and signed by the registered dealer to whom the goods were sold and containing the prescribed particulars on a prescribed form obtainable from the prescribed authority had to be furnished in the prescribed manner by the dealer who purchased the goods. In other words, the terms of section 5(2)(a)(ii) construed by the Supreme Court were more or less analogous to the provisions of section 8(1) and 8(4) of the Central Sales Tax Act, with this difference that, whereas under the Bengal Finance (Sales Tax) Act the proviso to section 5(2)(a)(ii) required the declaration form to be filled up and produced, under the Central Sales Tax Act the requirement is contained in sub-section (4) which starts by saying that the concessional rate provided for in section 8(1) will not be available to a dealer unless the declaration is filed. Subba Rao, J. (as his Lordship then was), pointed out that section 5(2)(a)(ii) was a provision exempting a specific turnover of a dealer from sales tax and had to be strictly construed. The substantive clause gave the exemption and the proviso which qualified the substantive clause, could not be so construed as to become redundant and otiose. If it had been the intention of the legislature to grant the exemption contemplated on some proof that the terms of the substantive part of sub-clause (ii) were complied with, the, proviso would become redundant and otiose. The learned Judge also pointed out that there was an understandable reason for the stringency of the provisions. While the section and the rules were obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods they also sought to prevent fraud and collusion with a view to evade tax. In the nature of things in view of numerous transactions that may be entered into between dealers it will be well nigh impossible for the taxing authorities to ascertain in each case whether a dealer had sold the specified goods to another for the purposes mentioned in the section. thereforee presumably to achieve the twofold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given was made subject to a condition that the person claiming the exemption should furnish a declaration form in the manner prescribed under the section. It was pointed out that a liberal construction in the manner suggested will facilitate the commission of fraud and introduce administrative inconvenience which the provision sought to avoid.
10. It appears to us that the observations of the Supreme Court in the above decision have full application to the provisions which we have to consider here. It has already been pointed out that the provisions of section 8(1) and 8(4) of the Central Sales Tax Act are not very different from those which the Supreme Court had to construe. If anything they are more categorical and make it more imperative that the production of a declaration form is a condition precedent for the availability of the concession. That apart the rules provide specifically for the contingency of a loss of a form of declaration. In such a case the selling dealer should approach the purchasing dealer for the issue of a duplicate along with a certificate as prescribed in the Rules. As far as we can see there is nothing to prevent any diligent assessed from obtaining the C form, if not contemporaneously with the transaction, at least not long thereafter and in case it is lost in transit, as had been alleged here, from obtaining a duplicate as provided for in rule 12(3). Nor has it been explained in this case why that was not done. The question, however, is whether the production by the assessed not of the duplicate form contemplated in rule 12(3) but a mere photostat copy of the counterfoil of the original form would be sufficient compliance with the provisions of rule 12(3). It is urged on behalf of the assessed that the production of the photostat copy is as good as the production of the original and should be treated as compliance with the provisions of rule 12(3). We are unable to accept this contention for a very important reason. What the assessed has now produced by way of photostat copy is only the counterfoil of the C forms that are said to have been issued on 12th February, 1969, by the purchasing company in favor of the assessed. It is claimed that the original and the duplicate of the above counterfoil had been lost. Obviously, since the purchasing company has gone into liquidation, the liquidator is not in a position to personally vouch for the transaction which the company had entered into and he could say nothing more than that the counterfoil is on the record of the company. He could not further commit himself to issue a duplicate certificate coupled with a declaration that the duplicate that is being issued is a duplicate of the declaration form originally issued to the selling dealer. Sri Chawla pointed out to us that the requirement in rule 12(3) is intended to meet cases of fraud, for an unscrupulous assessed could manipulate the form in such a way that while the counterfoil is issued in favor of one selling dealer the original and the duplicate parts might be issued to a different selling dealer. If that were done the selling dealer getting the original and duplicate portions would be able to claim a concessional rate of tax by producing those two documents before his Sales Tax Officer. On the other hand, another dealer could on the basis of the counterfoil or a photostat copy thereof be able to obtain relief under section 8(1) also. This could be checked only if all the counterfoils were checked with original foils but, since sales are spread over several States, such a check could be only by way of random check and most of the cases of fraud in this way would escape detection, by ensuring that the purchasing dealer is to report such losses and issue a duplicate with a certificate and also provide indemnity, the State is enabled to keep a check over case of such losses, compel the purchasing dealer to certify that the foil lost corresponds to the counterfoil and to ensure that, in case the mischief is detected, it would be possible to take civil or criminal action against the purchasing dealer. In all fairness to the assessed, Sri Chawla does not suggest that any such thing has happened in this case but only emphasises that there is a reason behind the insistence in rule 12(3) that when a form is lost the person who originally issued the form should issue a duplicate and also a certificate which will satisfy the authorities that it was the duplicate of the form originally issued and that the selling dealer should produce this duplicate in order to avail of the benefit of section 8(1). To illustrate with reference to the present case, while it is no doubt true that the records of the company show that the counterfoil in the possession of the purchasing company showed the assessed as the selling dealer in these transactions, there is nothing before the authorities to ensure that the original and duplicate parts pertaining to these declaration forms had also been issued only to the present assessed. The assessed is not in a position to say that because according to it these forms were never received by it; on the other hand, the purchasing dealer cannot vouch for the same because the company is no longer in business and the official liquidator is not in a position to say anything more than that the original counterfoils show the name of the assessed in respect of these transactions.
11. These arguments of Sri Chawla also assume great importance in view of the stringent provisions contained in the Central Sales Tax (Delhi) Rules regarding the issue and utilisation of these declaration forms. Rule 4 requires that a registered dealer who wishes to purchase goods from another such dealer on payment of tax at the rate applicable to sales between registered dealers for the purposes specified in the purchasing dealer's certificate of registration should obtain from his taxation officer blank declarations in form C. As soon as the transaction of purchase is entered by him he will have to fill in all the required particulars in the form in all its three parts, affix his signature in the space provided, retain the counterfoil with himself and issue the other two parts to the selling dealer. The proviso to rule 4(1) requires that the counterfoils of the declaration forms should be maintained by the dealer for a specified period apparently in order to facilitate checking, if considered necessary. These forms have to be obtained by him on payment of a nominal fee at the rate of 25 forms at a time. The declaration forms are to be kept by the dealer in safe custody and he will be personally responsible for the loss, destruction or theft of any such form or for loss to the Government revenue resulting from any such loss, destruction or theft. Sub-rule (5) of rule 4 requires the registered dealer to maintain registers in which should be entered a true and complete account of all C forms received by him from the sales tax authority. If any such form is lost, destroyed or stolen he should report the fact to the said authority immediately and also make necessary entries in the form C register. Under sub-rule (9) when a report is received about the loss, destruction or theft of a declaration form, the Commissioner of Sales Tax has to publish in the official Gazette the particulars of the form reported to be so lost, destroyed or stolen. If any unused declaration forms remain in stock, they will be surrendered to the sales tax authorities who issued them. Sub-rule (12) requires that when a blank or duly completed declaration form is lost in the custody of the purchasing dealer he has to provide an indemnity bond to the authority from whom the said form was obtained and if the form is lost while in the custody of the selling dealer he has to furnish an indemnity bond to the said authority for such loss. These rules emphasise the importance attached by the legislature to the declaration forms that have to be issued by the purchasing dealers. It is clear that these detailed provisions are intended as a measure of safeguard against possible misutilisation of the forms and also to ensure that relief is not obtained by more than one selling dealer in respect of the same declaration form by using the various parts of it differently. The emphasis in rule 12(3) that when a form is lost the purchasing dealer must issue a duplicate containing all the three parts with a declaration endorsed on each one of them also emphasises the importance which the Act attaches in order to ensure that the counterfoil retained by the dealer and the other parts according to the purchaser are identical on all respects and deal with the same transaction. The essence of these rules and regulations is that before a selling dealer is able to claim the benefit of concessional tax he should be able to produce the original and duplicate issued to him by the purchasing dealer in the first instance or a duplicate which will also contain these two portions of the form issued along with a declaration subscribed to by the purchasing dealer subsequently on the strength of his earlier records and his personal knowledge and for which he will have to account in due course to the sales tax authorities from whom he obtained these declaration forms. We me convinced on a perusal of the various provisions contained in the Act and the Rules that the requirement for the filing of a declaration form in a particular manner is not a mere formal or technical requirement but that it is intended as pointed out by the Supreme Court to achieve the object of preventing the forms from being used for the commission of fraud and also for purposes of administrative convenience. We are, thereforee, of opinion that the production of the photostat copy of the counterfoil cannot be said to be strict or even substantial compliance of rule 12(3) and that by merely producing the photostat copy of the counterfoil it cannot be said that the Act and the Rules have been complied with.
12. A reference was made in this context to the decision of the Supreme Court in State of Orissa v. M.A. Tulloch and Co. Ltd. : 7SCR816 That was a case decided under the Orissa Sales Tax Act. There the position was that the statute granted an exemption in favor of a dealer who sold goods to another dealer who fulfillled certain conditions. Under the Rules there was a separate provision that the selling dealer should produce a declaration form in order to satisfy the assessing authority that the conditions for exemption were fulfillled. In that case in respect of some sales the selling dealer was not able to produce the declaration in the form prescribed but appears to have brought the original certificate of registration of the buying dealer and produced it before the Sales Tax Officer. The rejection of the assessed's claim for deduction was sought to be supported by reference to the provisions of rule 27(2) which required the declaration to be filed and it was urged that the assessed could prove the facts necessary for exemption only in the manner contemplated by the rule. This argument was rejected by pointing out that the main provision in the statute did not contain any restrictions on the entitlement of the dealer to exemption and that if the rule were to be construed as mandatory in this regard it would be ultra virus the statute. In the circumstances the Supreme Court interpreted the statute and the rule harmoniously and reconciled the two provisions by treating the rule as directory. In our opinion, the construction of the statute and the rule by the Supreme Court in the case was on the terms of the specific provisions of the Orissa Sales Tax Act and the Rules which were under consideration of the court. But to the case presently under consideration the principle laid down in the case of Kedarnath Jute . v. Commercial Tax Officer : 3SCR626 would apply.
13. We have, thereforee, come to the conclusion that the learned counsel for the applicant is right in saying that the assessed would not be entitled to exemption by merely producing the photostat copies of the counterfoils. The stand taken by the applicant is also supported by the decision of the Andhra Pradesh High Court in State of Andhra Pradesh v. C. S. Bhoomi Reddy  26 S.T.C. 444, of the Orissa High Court in State of Orissa Polish Works  26 S.T.C. 480., and of the Allahabad High Court in Commissioner, Sales Tax, U.P. v. P. C. Majumdar and Co. Ltd.  44 S.T.C. 154 Reference was made on behalf of the respondent to the decision of the Madras High Court in Shansshia Oil Mills v. State of Madras  20 S.T.C. 481. But on going through the decision we find that the only point decided by the court was as to whether a photostat copy of the declaration could be filed at an appellate stage : the question whether the filing of a photostat copy would be sufficient compliance with the rules was left to be decided by the Tribunal.
14. For the above reasons we answer the question referred to us and as modified by us earlier in the negative and by saying that the assessed was not entitled to the concessional rate of taxation under section 8(1) in respect of sales of the turnover of Rs. 2,41,555.68. The reference is answered accordingly. But in the circumstances we make no order as to costs.
15. Reference answered accordingly.