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Hindusthan Stationery Works (Pvt.) Ltd. Vs. Member, Board of Revenue - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Case NumberMatter No. 279 of 1968
Judge
Reported in[1971]27STC394(Cal)
AppellantHindusthan Stationery Works (Pvt.) Ltd.
RespondentMember, Board of Revenue
Appellant AdvocateP.K. Mukherjee, Adv.
Respondent AdvocateS. Pal and ;P.K. Sengupta, Advs.
Cases ReferredDurga Sree Stores v. Board of Revenue
Excerpt:
- .....known, whether or not the applicant knew this cancellation, it had accepted from the purchasing dealer declaration forms which did not contain the purposes of purchase. in proper cases, as in the case of durga sree stores [1964] 15 s.t.c. 186, such declaration forms might not have been fatal. but when declaration forms of this nature are issued by a dealer whose registration admittedly has been cancelled, the omission to mention the purposes of purchase cannot be treated lightly or considered negligible, particularly in the context of the transactions prior to cancellation which have already been considered by us. in these premises the authorities, in our opinion, had justifiably refused to entertain the claim for deduction.8. our answers to both the questions referred to us are,.....
Judgment:

Sankar Prasad Mitra, J.

1. In this reference under Section 21(1) of the Bengal Finance (Sales Tax) Act, 1941, the following questions have been referred to this court:

(i) Whether there are admissible evidence and vital defects in the declarations in form XXIV furnished by the petitioner to justify disallowance of the deductions claimed under Section 5(2)(a)(ii), Bengal Finance (Sales Tax) Act, 1941, in respect of the sales for Rs. 83,921 to Messrs Roy & Co. prior to 7th January, 1957;

(ii) Whether there are admissible evidence and vital defects in the declarations in form XXIV furnished by the petitioner to justify disallowance of the deductions claimed under Section 5(2)(a)(ii), Bengal Finance (Sales Tax) Act, 1941, in respect of sales for Rs. 19,393-12-0 to Messrs Roy & Co. between the 7th January, 1957, and the 23rd February, 1957.

2. The applicant is a registered dealer and had claimed the aforesaid exemptions in respect of sales for the periods mentioned above. At the relevant time Section 5(2)(a)(ii) of the Act was as follows:

Section 5. (2) In this Act the expression 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom--

(a) his turnover during that period on--

(i) * * *

(ii) sales to a registered dealer of goods of the class or classes specified in the certificate of registration of such dealer, as being intended for resale by him, or for use by him in the manufacture of goods for sale or for use by him in the execution of any contract, and of containers or other materials for the packing of goods of the class or classes so specified:

Provided that in the case of such sales a declaration duly filled up and signed by the registered dealer to whom the goods are sold and containing prescribed particulars on a prescribed form obtainable from the prescribed authority is furnished in the prescribed manner by the dealer who sells the goods.

3. It is clear that in order to get a deduction from the 'taxable turnover' the sale must be to a registered dealer of specified goods for specified purposes. Moreover, a purchaser has to furnish a declaration satisfying certain conditions laid down in the proviso. In the instant case two types of deductions were claimed. The deduction in respect of Rs. 83,921 was for a period prior to the cancellation of registration of the purchaser. The deduction in respect of Rs. 19,393-12-0 was for a period after cancellation. The taxing authorities have dealt with these two periods separately. In the assessment order of the Commercial Tax Officer made on the 28th August, 1958, various grounds have been stated as to why the claim for the first period should be disallowed. Some of these grounds appear to us to be fatal to the claim. The Commercial Tax Officer has said (a) the declaration forms have not been 'duly' filled up which is a statutory obligation. (What he meant was that the declaration forms did not clearly indicate the purposes for which the purchases were made); (b) the selling dealer could not produce any order for sales made or could not produce any challan in support of the delivery of the goods; (c) all payments were made in cash which was a departure from the normal trade practice of paying heavy amounts by cheques; and (d) the dealer was given a chance to produce the orders and the challans but it failed to do so. In the appellate order of the Assistant Commissioner made on the 18th September, 1959, the same grounds for disallowance were advanced. The Assistant Commissioner states further:

In order to satisfy myself as to the genuineness of the transactions in question I demanded an inspection of the relevant purchase orders and delivery challans. But the petitioner-dealer could produce neither. Going through the declarations in question I find these were not duly filled up. I notice that the object of purchase was not indicated on the face of the declarations in question. Under the circumstances it is difficult to ascertain whether or not such purchases were in order and covered by the certificate of registration of the dealer....

4. The matter then came before the Additional Commissioner. In his order dated the 28th October, 1960, the Additional Commissioner has considered the grounds which had influenced the decision of the Assistant Commissioner and has mentioned that the learned Advocate appearing for the applicant admitted before him that the challans for sales to Messrs Roy & Co. were missing. It was also submitted to him that the omission to state the purpose of purchase in the declaration forms was negligible. The Additional Commissioner upholds the Assistant Commissioner's views and states that an omission to indicate the purpose of purchase is not a negligible omission. In this connection it may be relevant to refer to a decision of this court in Durga Sree Stores v. Board of Revenue, West Bengal [1964] 15 S.T.C. 186, on which counsel for the applicant before us had strongly relied. This is a Bench decision under Article 227 of the Constitution. It has been held, inter alia, that where a certificate of registration issued to a registered dealer contemplates that the purpose of purchase might well be either the purpose of manufacture or resale or any of the several alternatives mentioned in the foot-note of that form, the mere non-striking of any of the alternatives in the declaration forms would not be a fatal defect, as all the alternatives taken together, might very well be the purpose of purchase. Obviously, the decision has to be appreciated in the context of the facts presented to the court. Immediately after expressing its views aforesaid at page 198 of the judgment it is stated: 'In the present case, there is nothing to show that the certificates of registration of the dealers to whom the goods in question were sold, did not include those multiple purposes...'. It does not seem to us, therefore, that this decision assists the applicant in the present reference. Here apart from failure to indicate the purpose of purchase there are other weighty grounds to show that the genuineness of the purchases was not proved before the authorities concerned.

5. We now come to the decision of the Board of Revenue. The Member, Board of Revenue, it appears, had called for the records of Messrs Roy & Co., and had made various observations based on those records. We do not wish to make any comments on those observations but the Member, Board of Revenue, proceeds to add: 'So far as the prior sales are concerned, there are cogent reasons given as to why the declaration forms have not been accepted. I find nothing to justify a finding that the views held by the learned Additional Commissioner have been unreasonable with regard to the rejection of relevant declaration forms....'

6. Going through the decisions of the various authorities we have referred to, it is clear to us that with respect to sales prior to the 7th January, 1957, apart from various statements made by the applicant from time to time, there were no reliable documents to establish that the sales were in fact effected to a registered dealer. On the top of that, the declaration forms that were produced in support of these sales did not indicate the purpose for which the purchases were being made. In these circumstances, we are of the opinion that the tax authorities were justified in rejecting the claim for deduction.

7. We now come to the period between the 7th January, 1957, and the 23rd February, 1957. The Commercial Tax Officer has disallowed the claims on the ground that the supporting declaration forms had been issued by the purchasing dealer after cancellation of its registration certificate on the 7th January, 1957. The Assistant Commissioner has examined the bills in question. These are bills Nos. 1510, 1447 and 1232 dated respectively the 23rd February, 1957, the 17th February, 1957, and the 15th January, 1957. In other words, the transactions took place after cancellation of registration when the dealer, according to the Assistant Commissioner, had no authority to make tax-free purchases on the strength of a registration which had ceased to operate. The Additional Commissioner has noted that the Assistant Commissioner has not mentioned the date of the notification of cancellation in order to bring it within the knowledge of the applicant. But he has added that the declaration forms, the applicant was relying on, were defective as the purposes of purchase were not indicated therein. The Member, Board of Revenue, has also stated that the declaration forms afford no protection to the petitioner. To sum up, therefore, the position is that all the sales were effected after cancellation of registration of the purchasing dealer. Although the date of the gazette notification is not known, whether or not the applicant knew this cancellation, it had accepted from the purchasing dealer declaration forms which did not contain the purposes of purchase. In proper cases, as in the case of Durga Sree Stores [1964] 15 S.T.C. 186, such declaration forms might not have been fatal. But when declaration forms of this nature are issued by a dealer whose registration admittedly has been cancelled, the omission to mention the purposes of purchase cannot be treated lightly or considered negligible, particularly in the context of the transactions prior to cancellation which have already been considered by us. In these premises the authorities, in our opinion, had justifiably refused to entertain the claim for deduction.

8. Our answers to both the questions referred to us are, therefore, in the affirmative and in favour of the respondent. The applicant will pay to the respondent the costs of this reference,

Roy, J.

I agree.


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