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Praveen Motor Stores Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 1844 of 1984
Judge
Reported in1985RLR68
ActsDelhi Sales Tax Act - Sections 4
AppellantPraveen Motor Stores
RespondentUnion of India
Advocates: R.P. Bansal,; A.K. Singla and; R.K. Anand, Advs
Excerpt:
- .....to collect tax except in accordance with the act and the rules. (5) when a registered dealer sells goods to another registered dealer, that sale is exempt from tax by the definition of 'turnover' contained in s. 4(2)(a)(v). thus, when the dg of s & d sold the goods to the petitioner, the sale was not to be included in the d.g.'s 'taxable turnover'. it is when the registered dealer makes the sale to a non-registered dealer or an ordinary purchaser, that the tax is to be charged. it is only necessary to refer to the second proviso to s. 4(2)(a), which shows when the sale to a registered dealer is tax free. that proviso reads. 'provided further that no deduction in respect of any sale referred to in sub-clause (v) shall be allowed unless a true declaration duly filled and signed by.....
Judgment:

D.K. Kapur, J.

(1) The present Writ petition involves a very short point which has already been decided by several judgments of this Court, which are all unreported. The petition refers to some of these decided cases. We had accordingly issued Rule D.B., and heard arguments on the question involved.

(2) The question involved in this case is that the petitioner is a registered dealer under the Delhi Sales Tax Act, 1975. The Director General of Supplies and Disposals, respondent No. 2, sells Army disposal goods by way of inviting tenders. The petitioner was successful in purchasing certain electrical goods of a value of Rs. 5,77,786.00. According to letter accepting the tender, which is a sale letter dated 30-6-84 the petitioner was to pay Delhi Sales Tax as extra and it is this action which is challenged in the petition. This sales-tax is chargeable at 10%.

(3) As the petitioner is a registered dealer, it is claimed that be has not to pay the sales-tax. The petitioner has tendered the ST-I form by which a registered dealer can purchase goods free of payment of sales-tax.

(4) The scheme of the Delhi Sales Tax Act is that a registered dealer can collect sales-tax, but this can only be done in accordance with S. 22 of the Act. S. 50(g) makes it an offence to collect tax except in accordance with the Act and the Rules.

(5) When a registered dealer sells goods to another registered dealer, that sale is exempt from tax by the definition of 'turnover' contained in S. 4(2)(a)(v). Thus, when the Dg of S & D sold the goods to the petitioner, the sale was not to be included in the D.G.'s 'taxable turnover'. It is when the registered dealer makes the sale to a non-registered dealer or an ordinary purchaser, that the tax is to be charged. It is only necessary to refer to the second proviso to S. 4(2)(a), which shows when the sale to a registered dealer is tax free. That proviso reads.

'PROVIDED further that no deduction in respect of any sale referred to in sub-clause (v) shall be allowed unless a true declaration duly filled and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars in the prescribed form obtainable from the prescribed authority is furnished in the prescribed manner and within the prescribed time, by the dealer who sells goods'.

(6) The form is referred to as form ST-I. Once the ST-I form is furnished by the purchasing registered dealer, the selling registered dealer cannot charge the sales-tax from the purchaser.

(7) This is, thereforee a very clear case following from the manner in which sales-tax is collected under law. The sales-tax is not chargeable when one registered dealer sells to another registered dealer who furnishes an ST-I form. This is the scheme of taxation under the Act.

(8) It follows, that in this particular case, the D.G. of S & D could not insist on the sales-tax being paid by the registered dealer purchasing the goods. Such a charge would be contrary to law and would amount to a criminal offence u/s 50(g) of the Act.

(9) As the D.G. of S & D seems to be unwittingly committing the offence, we have no hesitation but to issue a writ directing that the sale to the petitioner will be without charging sales-tax provided that a valid ST-I form is supplied by the purchasing dealer. That has already been done, so we would allow the petition. Similar petitions have previously been allowed and we would expect this practice to come to an end as a Govt. dept. cannot be a party to a criminal offence.


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