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National Alloy and Metal Works (Pvt.) Ltd. Vs. Commercial Tax Officer, 24-parganas Charge and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Judge
Reported in[1985]58STC107(Cal)
AppellantNational Alloy and Metal Works (Pvt.) Ltd.
RespondentCommercial Tax Officer, 24-parganas Charge and ors.
Appellant Advocate Debi Prosad Pal and ; Anil Kumar Roy Choudhury, Advs.
Respondent AdvocateS.N. Dutt, Adv.
Cases ReferredHetram Agarwal v. Commercial Tax Officer
Excerpt:
- .....registration the petitioner has specified various items which include electrical goods and other goods manufactured by the petitioner. by the registration certificate the petitioner has been allowed to purchase free of tax brass, copper, bronze and any other materials, plant, machinery, spare parts, accessories and consumable stores which are required for use in any process in the manufacture of all sorts of metal sheet cases, hollow wares, enamel wares, all sorts of bronze, copper, lead, zinc, bronze materials, etc. it does not appear what enquiry was made before the certificate of registration was granted to the petitioner but there appears to be a mistake in describing the goods manufactured by the petitioner. as a matter of fact the raw materials which are required for the purpose.....
Judgment:

Ajit Kumar Sengupta, J.

1. The petitioner is a private limited company. The petitioner is manufacturer of hand signal lamps, buffer lamps, tail lamps, side lamps, slide doors, wall protectors (aluminium) and other railway carnage fittings and also of tin containers. The said manufactured goods are sold to the railway authorities as per their specification as Well as also other customers. The petitioner is the manufacturer of the said goods since its inception in 1949. It has also been stated that the raw materials which were and are required for use directly in the manufacture of the said goods are, amongst others, as follows :

Metal sheets, hollow wares, enamel wares, brass, copper, lead, zinc and bronze materials.

2. In compliance with the provisions of Section 4 of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the said Act), the petitioner made an application under Section 7 of the said Act for registration of the goods for manufacturing purpose in order to get benefit of concessional rate of tax and also exemption from payment of sales tax on the purchase of the said raw materials. The registration certificate in form No. IIA being No. PG/ 899A was issued to the petitioner on 5th July, 1949, by the Commercial Tax Officer, 24-Parganas Charge, and thereafter a duplicate copy of the registration certificate dated 5th July, 1949, was issued on 21st November, 1968, by the Commercial Tax Officer in lieu of PG/899 containing the raw materials on which the rate of tax would be applicable which is specified in Section 5(1)(bb) of the said Act. Since the date of the said registration granted to the petitioner, the petitioner is regularly assessed by the Commercial Tax Officer, 24-Parganas, and now by respondent No. 1. The petitioner being a registered dealer was ail along getting the benefit of concessional rate of tax under Section 5(1)(bb) of the said Act on the purchase of the raw materials as specified in the said registration certificate which were used in the manufacture of goods. The petitioner is also a registered dealer under the Central Sales Tax Act, 1956, valid from 1st July, 1957. The accounts maintained by the petitioner commencing from the 1st day of April, and ending on the 31st March, of each year. In the said registration certificate, the goods and/or materials, viz., all sorts of metal sheet cases, hollow wares, enamel wares, all sorts of brass, copper, lead, zinc, bronze materials, are specified for use in the manufacture in order to get benefit under Section 8(1) of the Central Sales Tax Act, 1956. Since the registration certificate granted to the petitioner in the year 1949, the petitioner is regularly assessed under the said Act on the taxable turnover of the sale of the said manufactured goods and up to the period for the four quarters ending 31st March, 1978, the assessments were completed. The sales tax was determined by the assessing authorities including respondent No. 1 on the turnover of the said manufactured goods sold to the railway authorities and other customers. The deductions in respect of the said manufactured goods sold to the registered dealer were allowed up to the said periods and the concessional rate of tax was allowed on the basis of the declaration forms produced by the petitioner in respect of the sale of the said manufactured goods to the registered dealer. Similarly purchases of raw materials were made from the registered dealers without payment of sales tax and/or payment of sales tax at a concessional rate prescribed in Section 5(1)(bb) of the said Act, against the declaration forms supplied by the petitioner as a registered dealer to the said selling registered dealer. The said declaration forms were issued by respondent No. 1 up to the date of 21st May, 1980, against the purchases made by the petitioner from time to time. The purchase of raw materials for using in the manufacture of goods as aforesaid and the declaration forms issued by respondent No. 1 against the purchase of raw materials in terms of Rule 27AA of the Bengal Sales Tax Rules, 1941, were never disputed by the respondent concerned including respondent No. 1 up to the date of completion of assessment on 8th March, 1982, for the period of 4 quarters ending on 31st March, 1978. The petitioner regularly obtained the requisite number of declaration forms from the Commercial Tax Officer concerned and now from respondent No. 1 herein, since the registration certificate granted on 5th July, 1949. As the said raw materials purchased by the petitioner were covered by the classes of goods specified in the registration certificate which were used in the manufacture, respondent No. 1 issued the declaration forms against the said raw materials purchased by the petitioner from the registered dealer. After furnishing the declaration forms issued by respondent No. 1 against the purchase bills, the petitioner got the benefits of payment of the tax at a concessional rate and also exemption from payment of sales tax on the goods purchased from the registered dealer against the said declaration forms. The declaration forms were issued by respondent No. 1 regularly up to the date 21st May, 1980, since the date of registration as on 5th July, 1949, to the petitioner. The petitioner sold the goods, manufactured by the petitioner, i.e., hand signal lamps, buffer lamps, tail lamps, side lamps, slide doors, aluminium wall protectors and other railway fittings and also tin containers, to the railway authorities as well as other registered dealers and customers. The petitioner allowed the concessional rate of tax and exemption from payment of tax on the sale of manufactured goods against the declaration forms supplied by the railway authorities and other registered dealers which were obtained from the appropriate Commercial Tax Officer against the bills of the petitioner. On the basis of the declaration forms, the petitioner claimed the deduction from the gross turnover under Section 5(1) and (2) of the said Act read with Rule 27 of the said Rules and the claims for deductions were allowed by respondent No. 1 after verifying the declaration forms supplied by the registered dealers to whom the goods were sold. The manufactured goods sold by the petitioner were all along accepted by respondent No, 1 as covered by the registration certificate. The raw materials purchased by the petitioner for manufacturing goods were also accepted by respondent No. 1 as covered by the registration certificate and the declaration forms were duly issued to the petitioner against such purchases from which the petitioner got benefit of payment of concessional rate of tax and benefit of exemption from payment of tax up to 21st May, 1980.

3. The petitioner was getting the requisite number of declaration forms from the predecessor of respondent No. 1 up to 21st May, 1980, and there was no dispute regarding the issue of declaration forms with the predecessor of respondent No. 1 that the declaration forms were not issued in accordance with law or those were not covered by the registration certificate. When respondent No. 1 had taken over the charge, the applications of the petitioner were placed before? him for consideration regarding the issue of the declaration forms, but respondent No. 1 did neither consider the applications of the petitioner nor any reason was recorded by him regarding his dissatisfaction.

4. Being aggrieved and dissatisfied with the action of respondent No. 1 withholding the issue of the requisite number of declaration forms, the petitioner moved an application under Article 226 of the Constitution of India, before C. K. Banerjee, J., on 25th March, 1983.

5. Upon the said application, C. K. Banerjee, J., passed the following order on 25th March, 1983 :

The petitioner will pay to the Commercial Tax Officer, 24-Parganas Charge, Group-A, the amount of Rs. 10,508.29 as stated in paragraph 5 of the petition which according to the petitioner is disputed. Such amount to be paid by instalments of Rs. 1,000 each and the last instalment will be Rs. 1,508.29. This payment is without prejudice to the rights and contention of the parties and if the petitioner succeeds in the proceedings in which such amount is disputed, the same would be refunded to the petitioner. Respondent No. 1 is directed to issue sales tax declaration forms as may be required by the petitioner in accordance with law. The first instalment will be paid within 16th April, 1983, and each subsequent instalment by 15th of each subsequent month.

6. The application is thus disposed of.

7. In compliance with the said directions contained in the order dated 25th March, 1983, the petitioner paid the entire disputed tax by instalments.

8. The grievance of the petitioner in this application is that by the order dated 7th April, 1983, certified copy whereof was obtained by the petitioner on 21st December, 1983, the Commercial Tax Officer rejected the application for declaration forms, inter alia, on the ground that the petitioner is not the manufacturer of the goods mentioned in the registration certificate in the manufacturing column and the materials purchased were not used in the manufacture of the said goods but were used for manufacturing goods other than mentioned in the manufacturing column. According to the Commercial Tax Officer both the manufactured goods and purchase of goods and/or materials for use in the manufacture of the goods mentioned in the registration certificate are not covered by the registration certificate.

9. Mr. S.N. Dutt, learned Advocate for the respondents, has produced the original records relating to the certificate of registration issued to the petitioner. He has submitted that certificate of registration was issued to the petitioner on the basis of its application wherein the dealer mentioned about the goods to be manufactured by it. There is thus no mistake in the registration certificate. He, therefore, submits that since the registration certificate does not cover the goods purchased, the application for declaration forms was rightly rejected.

10. In the application for registration made by the petitioner on 26th April, 1948, the peitioner mentioned the following : ,

The following classes of goods are ordinarily purchased by us :(a) For purposes of manufacture : (b) For resale :plates and sheets of all descriptions, All sorts of sheets, metalbrass, copper, bronze, zinc, lead, cases and hollow wares,machines and machine tools and enamel wares and alsoparts, wares, solder, elec. goods, steel including sheetsbuilding materials, coal, iron and and plates of all descrip-steel of all descriptions. tions.

11. We are manufacturing for sale the following classes of goods :

12. All sorts of brass, copper, lead, zinc and bronze materials and all sorts of finished hollow wares.'

13. Upon the said application the registration certificate being PG 899A was granted on 5th July, 1949, by the then Commercial Tax Officer, 24-Parganas. The counterfoil of the said certificate as found in the records contains the following endorsement:

Goods which the dealer may purchase free of tax: brass, copper, bronze and (1) any other raw materials, (2) plant, machinery, spare parts, accessories and consumable stores certified by the purchasing dealer to be required for use in any process in the manufacture of all sorts of metal sheet cases, hollow wares, enamel wares, all sorts of brass, copper, lead, zinc and bronze materials.

14. The said certificate, it appears was amended on 18th August, 1954, and certain other items had been included in the certificate of registration which the dealer may purchase free of tax, e. g., printing ink, paints, varnish, drawing paper and colour boxes, instrument boxes and tools.

15. It is evident from the said application for registration that the petitioner specifically mentioned that it manufactures electrical goods as well as other goods. There is no dispute that the petitioner manufactures side lamps, table lamps, buffer lamps, etc., as well as aluminium wall protectors and sliding doors mostly for the railways. It is true that in the registration certificate side lamps, table lamps, etc., aluminium wall protectors and sliding doors are not specifically mentioned. But the registration certificate covers the manufacture of all sorts of metal sheet cases, hollow wares, enamel wares, al] sorts of bronze, copper, lead, zinc and bronze materials. These goods are necessary for the manufacture of lamps and other goods. In the application for registration the petitioner has specified various items which include electrical goods and other goods manufactured by the petitioner. By the registration certificate the petitioner has been allowed to purchase free of tax brass, copper, bronze and any other materials, plant, machinery, spare parts, accessories and consumable stores which are required for use in any process in the manufacture of all sorts of metal sheet cases, hollow wares, enamel wares, all sorts of bronze, copper, lead, zinc, bronze materials, etc. It does not appear what enquiry was made before the certificate of registration was granted to the petitioner but there appears to be a mistake in describing the goods manufactured by the petitioner. As a matter of fact the raw materials which are required for the purpose of manufacture of lamps, etc., had been shown as goods being manufactured by the petitioner. On a correct reading of the registration certificate and the application for registration made by the petitioner it is evident that what the petitioner wanted to include in the certificate was not included in that form. The said certificate permits the petitioner to purchase free of tax all goods and raw materials mentioned therein for the manufacture of certain goods. Since 1949, the petitioner has been purchasing the goods for the manufacture of hand signal lamps and other railway carriage fittings as well as tin containers. The Commercial Tax Officer all along accepted that the said purchases made by the petitioner covered by the registration certificate and declaration forms were also issued against the purchases made by the petitioner and used in the manufacture of the said items of lamps and railway carriage fittings, etc. At no point of time the Revenue authorities objected to the issuance of declaration forms on the ground that the goods manufactured by the petitioner are not covered by the registration certificate. The petitioner is a manufacturing dealer. So long as there is no allegation that the materials purchased have not been used for the manufacture of the goods sold by the petitioner, the dealer cannot be deprived of the benefit of the registration granted to him in 1949 and acted upon by the authorities all these years. Before the registration is granted an enquiry is made to ascertain the correctness of the statements made in the application for registration. The order granting the registration is not found in the records nor it is known what enquiry was made and on what basis the certificate had been issued showing these goods as being manufactured by the petitioner when the said goods are used as raw materials. If there is a mistake in the registration certificate such mistake is bona fide and common to all the parties. The application form specifies all kinds of goods for manufacture including electrical goods, plates and sheets. Declaration forms have been issued to the petitioner. The petitioner obtained benefit by way of exemption in the assessment as a registered dealer. The petitioner issued the declaration forms to the purchasing dealers of the petitioner who also received benefit on the basis of such declaration forms issued to them by the petitioner. If at this stage the entire issue is to be reopened and redetermined on the basis of mistake which crept in the registration certificate this will create not only hardship to the petitioner but also to other dealers to whom the petitioner had issued the declaration forms. The respondents have all along examined the register of written declarations before issuing the declaration forms relevant enquiries were also made by the concerned Commercial Tax Officer. At this stage the refusal to issue declaration forms will result in great injustice and it will be most inequitable having regard to the acceptance for these long years that the registration certificate covers the goods manufactured by the petitioner and the petitioner is entitled to have the declaration forms in respect of the purchase made for manufacture of such goods. Had the application for the petitioner been rejected at the earlier stage the petitioner could have made the necessary amendment. If after lapse of about 34 years the Commercial Tax Officer wants to take the plea that the registration certificate does not cover the goods manufactured by the petitioner, a course has to be adopted which may not cause any injustice to the dealer.

16. There is another aspect of the matter. On 28th May, 1957, under the Central Sales Tax Act, 1956, registration was issued to the petitioner in the following terms :

The business is :

Wholly manufacturing and retail sale.

17. The Clause (a) of goods specified for the purpose of Sub-section (1) of Section 8 of the said Act is/are as follows and the sale of these goods in the course of inter-State trade to the dealer shall be taxable at the rate specified in that sub-section subject to the provisions of Sub-section (4) of the said section :-

(a) For resale. b) For use in manufacture. (c) For use inthe execution of contracts.All sorts of metal sheet cases, hollow wares, enamel wares, all sorts of brass, copper, lead, zinc, bronze materials.

18. Thus the said certificate of registration has correctly described that the goods in question, that is to say, all sorts of metal sheet cases, hollow wares, enamel wares, all sorts of brass, copper, lead, bronze materials, are used in manufacture by the petitioner. As a matter of fact the petitioner required those goods for the manufacture of the articles like lamps, etc., mentioned hereinabove. It cannot be contended nor has it been contended rightly that under the Bengal Finance (Sales Tax) Act and under the Central Sales Tax Act the types of goods manufactured by the petitioner or requirements of raw materials for such manufacture would be different. Since 1957 the petitioner obtained benefit under the Central Sales Tax Act which correctly described that the certain goods mentioned in the certificate are for use in the manufacture. Similar is the case under the Bengal Finance (Sales Tax) Act. As indicated earlier for some reasons or other what the dealer intended was not incorporated in the certificate of registration. But both the dealer and the Revenue authorities all along proceeded that these goods are really meant for use in the manufacture by the petitioner. There is thus an obvious mistake. The said mistake has crept in the registration certificate. It cannot be said that the application for registration did not broadly and mainly contain the goods which are being manufactured by the petitioner. It is, therefore, imperative to amend the registration certificate by incorporating the goods manufactured by the petitioner.

19. Mr. S.N. Dutt, learned Advocate for the respondents, has contended that after the mistake was detected by the officer he would be entitled to refuse any further declaration forms until the registration certificate of the dealer was amended by covering the goods manufactured by the petitioner. This contention is of substance and has to be accepted. But having regard to the fact that there has been a mistake or error in the registration certificate for no fault of the dealer the proper course would be to amend the registration certificate and thereafter to issue declaration forms. A contention has been raised that if an application is made now for amendment whether such amendment will be with retrospective effect. This Court in the case of Jagadish Prosad Agarwalla v. State of West Bengal reported in [1979] 44 STC 412 held that where a registration certificate issued to a dealer which contains an error or mistake committed by the officer in issuing the certificate, the authorities may be compelled by the appropriate writ to correct retrospectively such error or omission in the registration certificate of the dealer.

20. Dr. Pal has relied on an unreported decision of this Court in the case of Hetram Agarwal v. Commercial Tax Officer, Siliguri Charge, Siliguri (printed at page 115 infra). The judgment was delivered on 23rd February, 1973, by Anil Kumar Sen, J., in Civil Rule No. 2324(W) of 1967. In that case it was held that if the initial grant of the certificate is erroneous on the face of the record such grant could be set aside condoning the delay and a mandate could be issued upon the respondents to correct the registration certificate incorporating therein the commodities which were sought to be incorporated in terms of the application of the dealer.

21. In my judgment there has been an omission to include the goods manufactured by the petitioner in the registration certificate. This is an inadvertent mistake. This mistake has been overlooked for the last 34 years and both the petitioner and the department proceeded on the footing that the registration certificate covered the goods manufactured by the petitioner, or the goods specified were required for use in the manufacture by the petitioner as mentioned in the certificate of registration under the Central Sales Tax Act. Neither the application for registration nor the certificate of registration is unambiguous in detailing the goods manufactured by the petitioner. Taking into consideration the facts and circumstances of this case I are of the view that the proper course would be to direct the petitioner to make an application for amendment of the registration certificate incorporating the goods manufactured by the petitioner and the goods specified in the certificate are raw materials for use in the manufacture. Upon such application being made the respondent-Commercial Tax Officer shall incorporate the goods being manufactured by the petitioner and the goods required for such manufacture in the certificate. Such amendment shall date back to the date of registration certificate, i.e., 5th July, 1949, so that the petitioner or its purchasing dealers may not suffer any prejudice. After the amendment is effected by the Commercial Tax Officer which shall be done within one week from the date of receipt of the application by him, the Commercial Tax Officer will issue declaration forms to the petitioner in accordance with law.

22. This application is thus disposed of. There will, however, be no order as to costs.

23. Let a plain copy of the operative portion of this order countersigned by the Assistant Registrar (Court) be handed over to the learned Advocate for the parties concerned.


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