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Commercial Taxes Officer and anr. Vs. Board of Revenue and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtRajasthan High Court
Decided On
Case NumberD.B. Sales Tax Reference Case No. 192 of 1980
Judge
Reported in[1987]65STC440(Raj)
AppellantCommercial Taxes Officer and anr.
RespondentBoard of Revenue and anr.
Appellant Advocate G.S. Bapna, Adv.
Respondent Advocate V.K. Singhal, Adv.
DispositionPetition dismissed
Cases ReferredAssam Roller Flour Mills v. Commercial Taxes Officer
Excerpt:
.....observed by the assessing authority that where the raw material was purchased at a concessional rate of tax under section 5c of the act, the sale of goods produced therefrom like atta and maida was not exempted from payment of tax under the act......at the rate of 1 per cent. the wheat so purchased was converted by the assessee into wheat flour (atta) maida, suji, etc., but on the sale of these commodities no sales tax was paid by the assessee.3. the assessing authority was of the view that sales tax was payable at the full rate of 2 per cent on the sale of atta, maida, etc., relatable to that quantity of wheat was purchased on payment of concessional rate of tax at 1 per cent under section 5c of the act. it was observed by the assessing authority that where the raw material was purchased at a concessional rate of tax under section 5c of the act, the sale of goods produced therefrom like atta and maida was not exempted from payment of tax under the act. the assessee then filed a revised return on february 28, 1974, correctly.....
Judgment:
ORDER

Dwarka Prasad, J.

1. The only question which has been raised in this application seeking a reference under Section 15(2)(b) of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as 'the Act'), which has been treated by us as a revision petition under the amended provisions of the Act, because of the provisions contained in Sub-section (10) of Section 13 of the Rajasthan Sales Tax (Amendment) Act, 1984, is as to whether penalty under Section 16(1)(e) of the Act could be legally levied upon the assessee in the circumstances of the case.

2. The assessee, M/s. Rajasthan Roller & Flour Mills Private Ltd., Kota, carried on business of purchase of wheat and manufacture of wheat flour, maida, suji, etc. The assessee was registered as a dealer under the provisions of the Act. During the period November 10, 1969 to October 30, 1970, relating to the assessment year 1970-71, the assessee purchased certain quantity of wheat on payment of sales tax at the full rate of 2 per cent and some other quantity of wheat was purchased by him under Section 5C of the Act, on payment of concessional rate of sales tax at the rate of 1 per cent. The wheat so purchased was converted by the assessee into wheat flour (atta) maida, suji, etc., but on the sale of these commodities no sales tax was paid by the assessee.

3. The assessing authority was of the view that sales tax was payable at the full rate of 2 per cent on the sale of atta, maida, etc., relatable to that quantity of wheat was purchased on payment of concessional rate of tax at 1 per cent under Section 5C of the Act. It was observed by the assessing authority that where the raw material was purchased at a concessional rate of tax under Section 5C of the Act, the sale of goods produced therefrom like atta and maida was not exempted from payment of tax under the Act. The assessee then filed a revised return on February 28, 1974, correctly showing the sales of atta and maida in the taxable turnover. The assessing authority held that the tax was payable on the sale of atta and maida at 2 per cent. He also issued notice to the assessee as to why penalty should not be imposed under Section 16(1)(e) of the Act for deliberately furnishing inaccurate particulars in its return. The assessing authority, after considering the explanation furnished by the assessee, imposed a penalty in the sum of Rs. 31,500 upon the assessee under Section 16(1)(e) of the Act by its order dated May 18, 1974.

4. On appeal, the Appellate Assistant Commissioner reduced the amount of penalty to Rs. 25,000 by his order dated May 17, 1976. The assessee thereafter filed a revision petition before the Board of Revenue, which was allowed by the Board of Revenue vide order dated February 16, 1979. The Board of Revenue held that it could not be concluded from the circumstances of the case that there was deliberate intention on the part of the assessee to conceal the facts for evasion of payment of tax. It was observed by the Board of Revenue that no mens rea was proved and that the assessee claimed exemption on a mistaken impression that he had paid full tax. It was argued before the Board of Revenue that in the quantum appeal filed by the assessee, the learned single Member of the Board held that tax at the rate of 1 per cent more should be realised from the assessee on the purchase of that quantity of wheat which was purchased by him at the concessional rate under Section 5C of the Act. Learned counsel for the department submitted that a special appeal has been filed by the department against the order passed by the learned single Member of the Board in the quantum matter.

5. However, so far as the question of imposition of penalty is concerned, the case does not present any difficulty. The notification issued under Section 5 of the Act, which governs the payment of sales tax on the articles in question, is No. F. 5 (16)FD/CT/69-2 dated March 8, 1969. Item No. 3 of that notification describes the taxable commodity as:

Cereals and pulses in all forms (including atta, maida, suji and bran)-(a) Bajra, jowar and maize 1%(b) Others (including gowar and kulthi) 2%

6. Thus sales tax was payable on the sale of wheat in all its forms including atta, maida and suji at the rate of 2 per cent. The argument of learned counsel appearing for the department is that atta, maida and suji are commercially different commodities than wheat and as such the sale of atta, maida and suji is taxable at the rate of 2 per cent, even if purchase tax had been paid at the time of purchase of wheat. On the other hand, learned counsel for the assessee submitted that the words ''in all forms' are significant and show that sales tax in Rajasthan, which is leviable only at the first point of sale on such goods, is to be charged either when the sale of wheat is made or when sale of atta, maida or suji takes place. In case the sale of cereals has been subjected to payment of Rajasthan sales tax and if the assessee manufactured atta, maida or suji from the said wheat and sold the same, then the sale would not be taxable as it would be subsequent sale of the same taxable commodity, which has already been subjected to payment of sales tax. Learned counsel for the assessee drew our attention to the decision of a Division Bench of the Board of Revenue in Assam Roller Flour Mills v. Commercial Taxes Officer, Special Circle I, Jaipur 1976 RRD 255. In that case the assessee milled the tax-paid wheat into atta, maida and suji and argued that the sale of those commodities cannot be taxed. The Board of Revenue held that the phrase 'in all forms' governed the matter and once the sale or purchase of wheat is tax-paid, the sale of maida and suji manufactured out of the said wheat could not be again subjected to payment of sales tax. The Board of Revenue held that atta, maida and suji were covered by the entry 'cereals in all its forms' occurring in the aforesaid notification. The Board of Revenue relied upon a decision of their Lordships of the Supreme Court in State of Gujarat v. Sakarwala Brothers [1967] 19 STC 24 where it was held that the words 'any form of sugar' were intended to cover sugar in any form by whatever name called and it was held that patasa, harda and alchidana were all forms of sugar and fell within the definition of 'sugar'. It was observed that the legislature by using the words 'any form of sugar' intended to cover sugar of any description, in whatever form it may be found and by whatever name it may be called.

7. We may also observe that in this revision petition we are not called upon to decide as to whether the assessee was right or wrong in considering that the wheat was tax-paid and that the sale of atta, maida and suji was not taxable. As the special appeal filed by the department in the quantum matter is still pending before the Division Bench of the Board of Revenue, we do not desire to express any opinion on this question. But in any view of the matter two views are possible in this respect, as the Board of Revenue in the case of Assam Roller Flour Mills v. Commercial Taxes Officer, Special Circle I, Jaipur 1975 RRD 255, took the view that if the purchase of wheat was tax-paid, then the sales tax was not leviable on the sale of maida or suji. In these circumstances, it cannot be held that the assessee had deliberately furnished inaccurate particulars or there was any intentional misrepresentation on the part of the assessee in not showing the sales of atta, maida and suji in the taxable turnover while the said sales were shown in the tax-paid turnover of the assessee. We are unable to hold that there was any wilful or deliberate intention on the part of the assessee to conceal the facts or to evade the payment of tax.

8. We, therefore, agree with the view taken by the Board of Revenue in its order dated February 16, 1979. There is no force in this revision petition and the same is dismissed. The parties are left to bear their own costs of the proceedings in this Court.


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