1. Out of the turnover of Rs. 53,742 returned by the assessee respondent, Rs. 34,560 was covered by, C forms. The balance of the turnover was not covered by C forms and the assessing authority, the Deputy Commercial Tax Officer, accordingly assessed this latter part of the turnover at seven per cent under the Central Sales-tax Act. An appeal was taken by the assessee to the Appellate Assistant Commissioner, before whom the assessee admitted that the C forms relevant to the turnover of Rs. 19000 and odd assessed at seven per cent had been received only after the final assessment was over. The finalassessment by the Deputy Commercial Tax Officer in this case was on 15th June 1950, and the relevant forms were produced before the Appellate Assistant Commissioner on 27th July 1960. No explanation was given before the appellate authority for failure to produce these C forms earlier. The Appellate Assistant Commissioner therefore took the view that the transactions covered by this turnover of Rs. 19000 and odd had to be treated as sales made to unregistered dealers and confirmed the levy of tax on this turnover at seven per cent.
2. On the further appeal to the Tribunal, the Tribunal took note of the fact that contradictory versions were given by the assessee for his failure to submit the C forms along with the return, but nevertheless thought that as the C forms had been submitted before the Appellate Assistant Commissioner, that officer could have accepted these C forms and that there was no justification by him to hold that the sales would be deemed as those made to unregistered dealers in the face of the C forms now made available to him. The Tribunal proceeded to condone the delay in submitting the C forms and directed the turnover covered by them to be assessed at one per cent instead of at seven per cent.
3. The State is the petitioner, and the point that has been raised is that the acceptance of the C forms filed in the circumstances stated is not in accordance with the law. It is contended by the State that there is a specific time limit fixed in the rules and that there are no provisions which enable the Departmental officers or the Tribunal to condone the delay in the submission of the C forms and that there is in fact no discretion given to these officers to condone such delays.
4. On a careful examination of the relevant provisions, we are satisfied that the contentions of the petitioner are sound. That the transactions in the present case are sales in the course of inter-State trade is not in dispute. The taxation of such sales is governed by Section 8 of the Central Sales Tax Act. We shall confine ourselves to only those parts of the relevant provisions of the Act and the rules. Section 8(1) provides that tax under the Act shall be at one per cent on the turnover of a 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'. The goods covered by the transactions in the present case are claimed to be those described in Sub-section 3(b) of Section 8, that is,
'goods other than declared goods or goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf for use by him in the manufacture or processing of the goods for sale. ..........'
It is not in dispute that the goods in the transactions are goods other than declared goods. It should follow that in order to qualify for the rate of tax of one percent laid down in Section 8(1), these goods should be goods which are specified in the certificate of registration of the purchasing dealer as being intended for one of the purposes mentioned in Sub-section 3(b). If the goods covered by the inter-State sale are not goods which come within the description of Section 8(3)(b), it should follow that those transactions are taken out of the scops of Section 8(1) of the Act. The intention in this regard is made clearer still by Sub-section (4) of Section 8 which states :
'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....................'
The effect of this provision is not that in the absence of the certificate the sales are to be deemed to have been made to unregistered dealers but one more of a fundamental nature, viz. that those transactions are completely taken out of the scope of Section 8(1) of the Act. If the provisions of Section 8(1) do not apply, then, the provisions of Section 8(2) apply to those transactions, and this sub-section lays down
'The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of the goods in the course of inter-State trade, or commerce, not falling within Sub-section (1)(b) in the case of goods other than declared goods shall be calculated at the rate of seven per cent, or at the rates applicable to the sale or purchase of such goods inside the appropriate State whichever is higher'.
The effect of these provisions is therefore that where a declaration prescribed under Sub-section (4) is not furnished to the prescribed authority in the prescribed manner by a dealer selling other than declared goods in the course of inter-State trade or commerce, such goods are taken out of the scope of Section 8(1) of the Act and are made taxable under Section 8(2).
5. The next question to be considered is whether the declaration, that is, the C form, was furnished by the assessee respondent to the prescribed authority in the prescribed manner. If this condition is not fulfilled, the mandatory nature of Sub-section (4) of the Act leaves no alternative but to take the transaction outside the scope of Section 8(1).
6. The Central Sales Tax (Registration and Turnover) Rules provide for the determination of the turnover. Rule 12(1) states that the declaration referred to in Sub-section 4 of Section 8 shall be in form C. Section 13 of the Central Sales-tax Act enables the State Government also to make rules not inconsistent with the provisions of the Act and, with the rules made by the Central Government. Under Section 13, Sub-section (4)(e), the State Government may make rules providing for
'the authorities from whom, the conditions subject to which and the fees subject to the payment of which any form of declaration prescribed under Sub-section (4) of Section 8 may be obtained, the manner in which the form shall be kept in custody and records relating thereto maintained, the manner in which any such form may be used and any such declaration may be furnished.'
In exercise of this power, the Central Sales-tax (Madras, Rules were framed. Rule 5 provides, leaving out the parts which are not relevant:
'Every dealer.............. shall submit a returnof his transactions in the course of inter-State trade or commerce .................. in form I together withthe connected declaration form ............. so as toreach the assessing authority on or before the 25th of each month, showing the turnover for the preceding month and the amount or amounts collected by way of tax together with a chalan or crossed cheque in favour of the assessing authority for the payment of tax due thereon under the Act............'
7. The rule accordingly prescribes that along with the return of the turnover relating to any month, the connected declaration should be submitted so as to reach the assessing authority on or before the 25th of the succeeding month. Here is a rule setting out the manner in which the declaration should be furnished to the prescribed authority by the dealer selling the goods. While the above rule calls for the submission of a monthly return alone with the connected declarations to be submitted before a specified date and the failure to comply with this rule may result in the denial of the benefit of the lower rate of taxation contained in Section 8(1) of the Act, Rule 10 permits the dealer to furnish the declarations in respect of the entire turnover of the whole year, subject to certain conditions, Rule 10(2) contains an exception to Rule 5 set out above and it states that
'the dealer may instead of attaching the form of declaration to the return in form I, keep it in his custody subject to the condition that he maintains a register in form 9 showing serially and chronologically the receipt of the forms of declaration from the purchasing dealers and submits all the forms of the declaration relating to the year along with the last return in form 1 due for that year.'
A register in form 9 has thus been prescribed which has to be maintained if the dealer desires to take advantage of the provision enabling him to submit all the declarations in form C at the end of the year and not in the course of each month.
8. It is hot denied by the respondent assesses that he was not maintaining any register in form 9. He did not submit the C forms along with the monthly returns in form I before the 25th of the succeeding month. He did not also furnish the C forms in respect of the turnover of Rs. 19,000 and odd along the last return for the year and not even at the time when the final assessment was made by the Deputy Commercial Tax Officer. The question is whether under these circumstances it was open to the departmental officers and least of all the Tribunal to condone the delay in the production of the C forms.
9. When once the failure to furnish the C form declarations to the prescribed authority in the prescribed manner has been established, it seems to us that the necessary statutory result automatically follows, viz., that the transactions are taken outside the scope of Section 8(1) of the Act and no liberty or discretion is given by any provision of the Act or the rules to tax those transactions under Section 8(1) of the Act. This is not a case where the right to be taxed at the lower rate has been conferred independently of any other requirement. Two classes of transactions are described in Sections 8(1) and 8(2) of the Act and the failure to comply with certain conditions Is by the statute declared to take one class of those transactions out of Section 8(1) of the Act. It seems to us in the light of the provisions so framed, it is not open to the Tribunal 'to excuse the delay' in the submission of the C form declarations. No such power to excuse the delay is contemplated by the Act or the rules. On the other hand, unless the return is accompanied by the declaration in the prescribed manner, that transaction ceases to fall within the scope of Section 8(1) of the Act.
10. In State of Madras v. Jaggiah, 1954 5 STC 457, the question was considered whether in order to claim a deduction contemplated under Rule 5(1) (k) of the Madras General Sales-tax (Turnover and Assessment) Rules and a rebate under Section 7 of that Act, the assessee shouldcomply with the conditions and terms specified in the rules, it may be mentioned that in so far as the deduction under Rule 5(1) (k) is concerned, the registered dealer was called upon to submit a statement in the prescribed form on or before the 25th of every month relating to the transactions of the previous month. Similarly, in order to claim rebate under Section 7 of the Act, he had to make an application in a prescribed form within three months of the delivery of the goods outside the State. The learned Judge had to consider whether the failure to submit the return or to make the claim within the period stipulated in the rules disentitled the assessee to those reliefs. It was held that the right that was given was circumscribed by the condition prescribed and the failure to comply with that condition disentitled the assesses to claim those rights. The same view was taken in Deputy Commissioner for Commercial Taxes v. Lakshmanaswami, 1956 7 STC 560 : AIR 1956 AP 240, a Full Bench decision of the Andhra High Court. The learned judges observed that the language of the relevant rule relating to the deduction provided in Rule 5(1)(k) referred to above is absolute and peremptory and the deduction was available only on the assessee complying with the conditions prescribed.
In these two decisions, the question was dealt with on the basis that there was an exemption from tax granted by the statute and before a person could claim exemption, the claim must come strictly within the language governing the exemption. As we have pointed out, in the present case, the position is even stronger. It seems to us that when once by reason of the very provisions of the Act a particular transaction is taken out of the scope of the operation of Section 8(1), a subsequent compliance with the conditions will not serve to restore the transactions to taxability under Section 8(1) of the Act. These provisions appear to me to have been stringently framed so as to prevent abuse of effecting sales to consumers in the guise of sales to registered dealers for purposes of re-sale or manufacture. It follows therefore that the transactions covered by the turnover of Rs. 19000 and odd in dispute in the present revision petition were rightly brought to tax under Section 8(2) of the Act by the Deputy Commercial Tax Officer.
11. The order of the Tribunal which directed the taxation of these transactions under Section 8(1) is clearly erroneous. The petition is accordingly allowed with costs. Counsel's fee Rs. 100.