Abhyankar, J.
1. These two references at the instance of the petitioners, Messrs Home Industries Corporation, have been made by the Sales Tax Tribunal, referring the following question to the High Court :
'Whether on a true and correct interpretation of Section 8(b) of the Bombay Sales Tax Act, 1953, read with Form J, and having regard to the facts and circumstances of this case, was the Tribunal justified in law in disallowing the claim of the applicants to the sum of Rs. 2,98,958 ?'
The two references are with respect to the following periods : 1st April, 1958 to 31st March, 1959, in S.T. Ref. No. 26/1968, 1st April, 1959 to 31st December, 1959 in S.T. Ref. No. 25/1968.
2. The amount of turnover of sales involved in the earlier period is Rs. 2,98,958; and in the subsequent period it amounts to Rs. 4,06,121.
3. In the statement of the case drawn up by the Tribunal it is stated that the applicants import motor spare parts and carry on the business of selling them either locally or in the course of inter-State trade. They also at times export motor spare parts out of this country. The modus operandi followed by the applicants is as follows :-
As and when the customer steps into the the office of the applications, they first enquire from the customer whether he would sell the goods in this state or whether he would sell the goods in the course of inter-State trade or commerce. In case the customer declares that he requires the goods for the purpose of resale in this State. the applicants mark 'Form K' on the bill and charge only sales tax. When the customer declares that he will sell the goods in the course of inter-State trade and despatch them outside Bombay State, the applicants mark on the invoice 'Forms J and K' and do not charge any tax. When the customer does not declare as to whether he is going to resell the goods locally or in the course of inter-state trade, the applicants charge both taxes, sales tax and general sales tax. At the time of effecting the sale itself the applicants take sufficient care to ascertain the intention of the purchasing dealer as to whether he would resell the goods locally or despatch them outside the State of Bombay.
We are concerned in these references only with the claim of the deductions under section 8(b) of the Bombay Sales Tax Act, 1953.
4. It appears the assessee had not filed with the periodical returns the certificate in Form J in respect of the sales for which deductions were claimed under section 8(b), But during the course of assessment proceedings, it is now common ground that such certificates in Form J were produced before the assessing authority. The Sales Tax Officer disallowed the claim for deductions on all these sales under section 8(b) of the Act on the ground that declarations were not obtained from the customers at the time of the sale. The appeal filed against this order failed to give relief to the petitioners. But when the matter came up in revision before the Deputy Commissioner, he modified the orders of the assessing authority by giving relief to the assessee to this extent that the deductions were held admissible in respect of those sales which were covered by certificates granted within six months from the date of the sale. Even in this class of deductions, however, the Deputy Commissioner as well as the Tribunal took the view that even in respect of the certificates in Form J deductions will be admissible in the case of those sales only in which the assessees were able to establish that the goods covered by those sales were actually despatched within a period of six months by the purchasing dealer or by the registered dealer to whom the purchasing dealer had sold those goods.
5. When the matter was taken to the Tribunal, the Tribunal endorsed the same view of the Deputy Commissioner purporting to follow a decision of this Court, which however is not reported, viz., Sales Tax Reference No. 26 of 1960, National Ekco Radio and Engineering Co., Ltd. v. The State of Bombay, decided on 9th April, 1962. In paragraph 7 of the revisional order the Tribunal observes as follows in rejecting the contentions of the assessee in revision :
'7. In our opinion, if the declarations in Form J are received within six months from the date of sale, such declarations must be accepted as valid in support of an exemption under section 8(b) of the Act, provided such declarations are issued by the purchasing dealer prior to the date of despatch and not after the date of despatch. This is clearly the ratio of the decision of the Maharashtra High Court in the case of Messrs National Ekco Radio and Engineering Co., Ltd. v. The State of Bombay referred to above ...........'
When it was urged before the Tribunal on behalf of the applicants that it was not possible for the selling dealer like the assessee in this case to establish either the date of sale or the date of despatch of the goods covered by the certificate by the purchasing dealer, the Tribunal observed as follows :
'9. Coming now to the other contention of the learned Advocate regarding those declarations in Form I which have been issued by the purchaser within six months from the dare of sale, we have to state that before the lower authorities, the assessee has not proved or tried to establish that such declarations were issued by the purchaser before the date of despatch by the purchaser. It is true that the seller cannot be penalised for the non-compliance by his purchaser as regards the maintenance of forms NA and NB under the Act, but the burden of proving that the declarations which the seller has obtained from the buyer have been issued by the buyer before the date of despatch by him is squarely on the seller and, in our opinion, the applicant, i.e., the seller before us, has not discharged this burden satisfactorily, We, therefore, reject the contention of Mr. Patel in this behalf also ...'
It may be mentioned at the outset that the material provision of the statute for the period which was relevant in the National Ekco Radio and Engineering Company's case was from 1st April, 1955 to 31st March, 1956. Now, section 8(b) of the Act has undergone changes between the period 1st April, 1953, to 31st March, 1954, and again between 1st April, 1954 to 31st October, 1956, and the relevant provision which is now applicable and which formed part of the statute book during the period with which we are concerned in this proceeding, is worded as follows :
'8. (b) Sales of goods to a dealer who holds an authorization and furnishes to the selling dealer a certificate in the prescribed form declaring inter alia that the goods so sold to him are intended for being despatched by him, or by registered dealers to whom he sells the goods, to an address outside the State of Bombay.'
Section 8(b) was as follows during the period 1st November, 1956 to 7th April, 1957 :
'8 (b) Sales of goods to a dealer who holds an authorization and furnishes to the selling dealer a certificate in the prescribed form declaring inter alia that the goods so sold to him are intended for being despatched by him, or by registered dealers to whom he sells the goods, to an address outside pre-Reorganisation State of Bombay, excluding the transferred territories.'
The provisions of section 8 with which we are at present concerned are to the following effect :
'8. Subject to the provisions of section 7, there shall be levied a sales tax on the turnover of sales of goods specified in column 1 of Schedule B at the rate, if any, specified against them in column 2 of the said Schedule, after deducting from such turnover -
(a) sales of goods -
(i) which have been purchased from a registered dealer on or after the appointed day, or
(ii) on the purchase of which the dealer has paid or is liable to pay the purchase tax :
Provided that the goods have not been processed or altered in any manner after such purchase;
(b) sales of goods to a dealer who holds an authorization and furnishes to the selling dealer a certificate in the prescribed form declaring inter alia that the goods so sold to him are intended for sale in the course of inter-State trade or commerce or in the course of the export of goods out of the territory of India, by him or by the registered dealers to whom he sells the goods :
Provided that -
(i) where a certificate has been furnished under this clause in respect of any goods, the purchasing dealer shall not be entitled to claim a deduction under this clause in respect of his sale of the said goods; and
(ii) where any goods to which this clause applies are not shown to the satisfaction of the Collector to have been sold in the course of inter-State trade or commerce or in the course of the export of goods out of the territory of India, by the dealer furnishing such certificate or by a registered dealer to whom he has sold the goods within a period of six months from the date of purchase by the dealer furnishing the certificate, the said dealer shall be liable to pay purchase tax under clause (b) of section 10 on the purchase of such goods.
Explanation. - For the purpose of this section a purchase of goods shall not include any purchase which is not liable to tax by virtue of the provisions of section 46 or any purchase which takes place in the course of trade or commerce between the area of the pre-Reorganisation State of Bombay, excluding the transferred territories on the one hand and any territory of the State of Bombay outside that area on the other.'
Even a casual perusal of the changes made in sub-section (b) of section 8 from time to time will show that whereas in the earlier period, i.e., from 1st April, 1954 to 31st October, 1956, the purchasing dealer had to give a certificate in the prescribed form declaring that the goods so sold to him are intended for being despatched by him to an address outside the State of Bombay, in the next succeeding period between 1st November, 1956 to 7th April, 1957, the certificate was to the effect that the goods so sold to him were intended for being despatched by him to an address outside the pre- Reorganisation State of Bombay excluding the transferred territories. Under the relevant provisions applicable to the period with which these two references are concerned, however, the certificate has to contain a declaration that the goods so sold to him are intended for sale in the course of inter-State trade or commerce or in the course of the export of goods out of the territory of India. Thus under the two earlier provisions the declaration was in respect of the intention of despatch of the goods outside the State, the declaration of intention in the relevant provision now applicable to the period under consideration is of an intention of sale in the course of inter-State trade or commerce or in the course of export of goods outside the territory of India.
6. The form in which the provisions of section 8(b) stood during the period relevant for the purpose of these references was substituted by the provisions of the Bombay Act 16 of 1957, and they came into effect from 8th April, 1957. An important amendment was correspondingly made in section 10 of the Act by substituting new sub-clause (b) of section 7, and that provision of section 10(b) as substituted and applicable at the relevant time is as follows :
'10. Levy of Purchase tax. - Subject to the provisions of section 7, there shall be levied a purchase tax on the turnover of purchases of goods specified in column 1 of Schedule B, at the rates, if any, specified against such goods in column 4 of the said Schedule, -
(a) where such goods ........................... dealer;
(b) where a certificate under clause (b) of section 8 has been furnished in respect of such goods and the purchasing dealer does not show to the satisfaction of the Collector that the goods have been sold by him or by a registered dealer to whom he has sold the goods, in the course of inter-State trade or commerce or in the course of export of goods out of the territory of India, within a period of six months from the date of purchase by the dealer furnishing such certificate.
Provided that no purchase tax shall be levied under clause (a) on the purchase of any goods specified in entries 3, 6 to 9, 13, 14, 17 and 18 (both inclusive) of Schedule B if such goods are sold by the dealer after such purchase.'
This substitution was also made by the same Bombay Act 16 of 1957 and was put into effect from 8th April, 1957.
7. The contention of the applicants in support of these references is that on a plain reading of the provisions of section 8(b), as is now applicable for the relevant period, an assessee like the applicants is entitled to a deduction from his turnover in respect of sales of goods to a dealer who holds an authorization, the turnover in respect of the sales of goods to him in respect of which the purchasing dealer furnishes the relevant certificate that the goods sold to him are intended for sale in the course of inter-State trade or commerce or in the course of export of goods outside the territory of India; it is urged that prima facie no limit of time is prescribed and provided for furnishing of such a certificate by the purchasing dealer to the selling dealer like the assessee in this case. It is, therefore, urged that it is not permissible to import by implication any limit of time for the furnishing of such certificate by the purchasing dealer in respect of the goods sold to him which he in his turn declared to have purchased for sale in the course of inter-State trade or commerce or in the course of export of goods outside the territory of India.
8. In this context reference is also made to the provisions of section 10(b) of the Act, which we have reproduced above, and which is relevant and applicable; and by reference to this provision it is urged that in case such purchasing dealer does not sell the goods in the course of inter-State trade or commerce or in the course of export of goods outside the territory of India, the necessary consequence of such failure is to attract the liability for payment of purchase tax by such purchasing dealer. There is no dispute that the quantum of purchase tax and sales tax leviable in respect of such sale or purchase is identical. In other words, the revenue which is obliged to give deductions in respect of sales tax for the sale of goods under section 8(b) is entitled to recover an identical sum by way of purchase tax in respect of the goods which are not sold within six months in the course of inter-State trade or commerce or by way of export of goods outside the territory of India.
9. Under Rule 13(1) of the Rules called the Bombay Sales Tax (Registration, Licensing and Authorization) Rules, 1954, the certificate for the purpose of clause (b) of section 8 has to be in Form J. A persual of Form J would show that under such certificate the purchasing dealer has to certify that the goods purchased by him are 'intended for being sold' by him in the course of inter-State trade or commerce or in the course of the export of the goods out of the territory of India. The certificate has also to mention that the goods were purchased by the purchasing dealer as specified in the number of the cash memo, and the bill and the date thereof, and the name of the selling dealer from whom the goods were purchased. Now a purchasing dealer who is entitled to give such certificate is a dealer who has obtained an authorization under rule 11 of the said Rules. The authorization is in Form H. The authorization in Form H is given subject to certain terms and conditions mentioned therein. The material terms in the authorization in Form H are to the following effect :
'5. The sales of other dealers to the holder of this authorization will be free of sales tax in the case of goods certified by him in Form J declaring that the goods are intended for being sold in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India by him or by registered dealers to whom he sells the goods.
6. The holder of this authorization or any person nominated by him under paragraph 7 of this authorization shall furnish to the selling dealer a certificate in Form J in respect of any goods purchased by the said holder under the authorization. The certificates in the said Form J furnished by the said holder shall be serially numbered by him in chronological order and the said holder shall keep and produce before the Collector the assessing authority, if so required, mechanically duplicated (or carbon) copies of such certificates duly signed and dated.
7. The holder of this authorization may for the purpose of paragraph 6 thereof nominate any person to sign certificates on his behalf in respect of goods purchased by the licensee under this authorization and the name and signature of the person so nominated shall be entered in the statement appended to this authorization.
8. The holder of this authorization shall maintain a register of the goods sold by him in the course of inter-State trade or commerce or in the course of the export of the goods out of the territory of India, showing therein the date of the sale, the number of the bill or invoice, the date and place of despatch, the mode of despatch, the name of the ship or vessel or number of motor vehicle, as the case may be, the number of railway receipt or other documents relating to the despatch, the destination, the name of the consignee and a brief description of the goods despatched; and he shall also maintain another register of the goods sold by him to registered dealers and sold by them in the course of inter-State trade or commerce or ill the course of export of the goods out of the territory of India, showing therein the name of the purchasing dealer and all other aforesaid particulars except the name of the consignee; and he shall further obtain, and produce whenever required, certificates from such purchasing dealers in Form N.
9. The holder of this authorization or any person nominated by him under paragraph 7 thereof shall produce this authorization for the inspection of any dealer from whom he purchases any goods under this authorization or for the inspection of the manager or agent of such dealer whenever required to do so.
10. If the turnover of sales specified in sub-section (1) of section 12A of the said Act of the holder of this authorization during any year ending on the 31st March fails to exceed Rs. 50,000, the said holder shall return this authorization along with all duplicate copies thereof to the Collector for being cancelled under sub-section (3) of section 12A of the said Act.'
10. Under condition No. 6 the certificate to be given by the purchasing dealer in Form J has to be serially numbered by him in chronological order, and he has to keep and produce before the Collector or the assessing authority, if so required, mechanically duplicated copies of such certificates, duly signed and dated. Similarly under rule 14-B of the said Rules every dealer who holds an authorization shall, in respect of the goods purchased by him by furnishing to the selling dealer a certificate in Form J, maintain a register in Form NA of the sale of such goods by him in the course of inter-State trade or commerce or export out of the territory of India. Now a perusal of the Form NA Register will show that the purchasing dealer has to maintain in meticulous details all the transactions of such purchases, viz., date, quantity, serial No. and date of the certificate in Form J under which the goods were purchased, purchase price; and what is most important, in column 7 the date of sale in the course of inter-State trade or commerce or export out of India, and other details in the subsequent column. Thus it will be seen that issuance of a certificate in Form J is not an isolated act to be performed by the purchasing dealer without responsibility. He has to maintain a proper register, give all the necessary details and to connect every sale in respect of his certificate with every purchase in respect of these goods from a selling dealer to whom the certificate in Form J is given by him.
11. Now it seems to have been contended before the authority that mere production of a certificate in Form J by the selling dealer like the assessee in this case would not entitle the assessee to deductions under section 8(b), unless the assessee were also to establish, firstly, that the certificate was issued within six months, and secondly, that the certificate was issued before despatch of the goods. We do not see the relevance of the latter requirement, because under the relevant provision of section 8(b) applicable during the period with which we are concerned, despatch of goods by the purchasing dealer was not at all germane or relevant. In fact the scheme has been completely altered and with effect from 8th April, 1957, deduction can be claimed only in respect of purchases which are made with the intention of making sale in inter-State trade or commerce or with a view to export the goods out of the country. We, therefore, do not find any relevance in considering the despatch of the goods in the discussion or observations in the orders of the authorities in this case. Perhaps a reference was made to the despatch of the goods in view of the facts which gave rise for the decision of the Court in the National Ekco Radio & Engineering. Co.'s case. At the relevant time, the provisions of section 8(b) applicable for the period with which that case was concerned, the purchasing dealer had to give a certificate about his having purchased the goods with the intention of despatching them out of the State or outside the pre-reorganisation territory, as the case may be. But so far as the material provisions of section 8(b) are concerned, as applicable for the period for which these references arise, we do not think that despatch of goods has any relevance in construing the section.
12. The contention on behalf of the revenue that the certificate must be given at the time of purchase by the purchasing dealer has already been rejected in the National Ekco Radio & Engineering Company's case, and nothing that is stated before us seems to justify any different view being taken as to the time when the certificate should be obtained. The decision of this Court in the National Ekco Radio & Engineering Co.'s case also does not make any reference to the certificate being given within the period of six months as far as we are able to ascertain from that judgment. The period of six months seems to be suggested by the department in view of the provisions of section 10(b), which we have reproduced above; it seems to be assumed that the purchases of goods purchased with the intention of selling them in the course of inter-State trade or commerce or by export are necessarily conditioned by an obligation on the part of the purchasing dealer that he will sell the goods within a period of six months as provided by section 10(b) of the Act. It, therefore, seems to be urged that this period of six months is the limit of time within which in any case the certificate in Form J must be issued or must be obtained. We are not in a position to accept this interpretation of section 8(b) vis-a-vis section 10(b) of the Act.
13. It is true that a purchasing dealer or authorized dealer who issues a certificate in respect of purchase of goods from a selling dealer is required to pay purchase tax if he does not sell the goods in the course of inter-State trade or commerce or in the course of export of goods outside the territory of India within a period of six months from the date of purchase for which certificate in Form J is given by him. But we are unable to hold by reason of this provision that this casts any corresponding obligation on the selling dealer to obtain a certificate within that period. The consequence of inability to sell, either by circumstances or otherwise, the goods purchased by the authorized dealer for a period of six months from the date of purchase, is only to make him liable for payment of purchase tax. But we fail to see how that inaction or failure on the part of the purchasing dealer should in any way affect the right of the selling dealer under section 8(b) from getting deduction as provided in that section on his furnishing the necessary certificate, a perusal of Form J in which the, certificate has to be given would show that the certificate has to be given at a point of time when the goods purchased by the authorized dealer have not been sold. The certificate has to state in terms that the goods purchased by the purchasing dealer 'are intended for being sold by him'. It would be in apposite to use these words in respect of the certificate which is issued after the goods are sold. It must, therefore, follow that in all cases where a certificate is issued, prima facie it will be issued at a date when the goods are yet to be sold by the purchasing dealer. But it is argued that it may happen by some sort of an understanding, if not collusion, between the two dealers that the certificate can be given after the goods are sold so as to enable the selling dealer to claim deduction, and in such a case the selling dealer will claim deduction on a certificate which will be contrary to the intention of the Act. In our opinion, assuming in a given case it is proved that such a certificate has been issued, the revenue is not put to a loss on that account.
14. In respect of all purchases covered by a certificate given in Form J, the certificate fully discloses the name of the purchasing dealer, quantity of goods purchased, coupled with a declaration that the goods were purchased with the intention of selling them in the course of inter-State trade or commerce or exporting them outside this country. The date of purchase is also given in such certificate. On the basis of such certificate the revenue may not find it difficult to ascertain whether the goods have been in fact sold as declared in such certificate within a period of six months from the date of the original purchase. If it is found that the goods are not so sold, the purchasing dealer at once becomes liable for payment of purchase tax under section 10(b). On the other hand, if it is found that the certificate is given after the date of the sale, it would amount to giving a certificate which is not true. The Legislature seems to have made ample provision and prescribed heavy penalties for issuance of such a false certificate. In this connection our attention was invited to the provisions of section 39A of the Sales Tax Act, 1953. That section reads as follows :
'Section 39A. Penalty for false declaration or certificate or for not abiding by declaration or certificate furnished. - (1) Where under the provisions of this Act or the rules made thereunder or under the relevant sales tax law, a person furnishes a declaration or certificate by reason of which any tax under this Act or the relevant sales tax law is not leviable on any sale or purchase and where such person knew or had reason to believe that such declaration or certificate was false or such person fails to abide by it, or acts in contravention of the recitals or terms of such declaration or certificate the Collector may after giving such person a reasonable opportunity of being heard, direct him to pay by way of penalty a sum not exceeding double the amount of tax which in the opinion of the Collector would have been leviable on such sale or purchase had such declaration or certificate not been furnished :
Provided that where the price at which such purchases were made by such person is liable to be included in his taxable turnover under the relevant Sales Tax Law, the sum payable by way of penalty shall not exceed the amount of tax. (2) Any sum payable by way of penalty under this section shall, if not paid before such date as the Collector may direct, be recoverable as an arrear of land revenue.
(3) The Collector may, by order in writing, delegate the powers and functions exercisable by him under this section to any person appointed to assist him under this Act or, as the case may be, the relevant sales tax law.
Explanation .................'
15. A perusal of this section will show that where a false certificate is given, such person giving a false certificate at once becomes liable for payment by way of penalty a sum not exceeding double the amount of tax which would have been leviable on such sale or purchase had such declaration or certificate not been furnished. The purpose of giving a certificate is also clear from this section itself. The certificate required to be given in Form J is a certificate by reason of which any tax under the Act is not leviable, or a sale or purchase becomes exempt from tax. Thus so far as the selling dealer is concerned, he qualifies for relief under section 8(b) in respect of such sale the moment the certificate is issued in Form J prescribed by this statute. We do not find any warrant for implying any limit of time within which such certificate is to be issued by the purchasing dealer. Ordinarily, however, it is unlikely that a purchasing dealer who is enjoined by the Act and the Rules to maintain registers in Forms N and NA and also duplicates of the certificate in Form J which he is required to issue, that there will be much scope for the evasion of payment of tax either under section 10(b) or penalty under section 39A. It was suggested that in case no such registers are maintained by any of the purchasing dealers, the department will be unable to verify or ascertain as to when the sales have in fact taken place from the purchasing dealer. We do not think that this apprehension is well founded either. In case a purchasing dealer fails to satisfy the authorities that he has effected sales in respect of the goods covered by the certificate within a period of six months, it would also follow as a matter of course that such sales will be liable to purchase tax payable by the purchasing dealer under section 10(b) of the Act. The burden in all such cases will be on the purchasing dealer to establish as to when he effected the sales of goods which he purchased under the certificate in Form J.
16. What we are trying to point out by an examination of the scheme of sections 8 and 10, Forms J, H, N and NA and the Rules made under the Act is to show that so far as the selling dealer is concerned, he seems to be entitled to deductions under section 8(b) the moment he produces a certificate in Form J in respect of the sales effected by him in favour of a purchasing dealer who is also an authorized dealer. Not only there is no limit of time for issuance of such certificate provided under the statute, but the safeguards which we have pointed out make it unlikely that the certificates will be issued after the sales are effected by the purchasing dealer. The only safeguard that was required to be provided for is to ensure that the sales are effected within a period of six months so that the sales are truly in the course of inter-State trade or for export. But the burden in such cases would ordinarily be on the purchasing dealer who claims exemption from the liability for payment of purchase tax; and we do not find any reasonable difficulty in carrying out the purpose of the Act with reference to section 10(b) either.
17. The Tribunal in its revisional order has observed, as we have pointed out earlier, that it is for the selling dealer to prove that the declarations were issued by the purchasing dealer before the date of despatch of the goods by the purchaser. In the first place, as we have already observed, it is not relevant to refer to the date of despatch of the goods. We do not also find any warrant in the scheme of the Act or the wording of section 8(b) for holding that the selling dealer is obliged to prove that the certificate was issued by the purchasing dealer within six months from the date of sale. Apart from the fact that the selling dealer is unlikely to have any information or means for so proving this date, the responsibility is cast on the purchasing dealer who issues the certificate, firstly, to issue the certificate before the sale, then to maintain in proper register chronologically the dates of purchase and sale, as well as the date of certificate issued by him; and in case it is found that his sales are not within a period of six months from the original date of purchase, such purchasing dealer becomes liable for payment of purchase tax. This being the scheme of the Act, we fail to see how the claim of the selling dealers who have furnished the certificate can be disallowed on the ground that they have failed to prove that the certificate was issued within six months from the date of sale or before the date of despatch.
18. In the result, our answer to the question referred is in the negative, viz., that the Tribunal was not justified in law in disallowing either of the claims in any of these applications on the ground that the certificates in Form J were not shown to have been issued before the date of despatch or before the date of sale.
19. Thus the references will be answered accordingly. The assessee will be entitled to his costs in each of these references, quantified at Rs. 250 in each and the refund of the deposits of Rs. 100.
20. References answered accordingly.