Birendra Singh and Company Vs. Regional Assistant Commissioner of Sales Tax and ors. - Court Judgment

Excerpt:
- indian penal code, 1890.sections 307 & 324: [lokeshwar singh panta & b.sudershan reddy,jj] assault proof - appellant allegedly dealt sickle blow to deceased - testimony of eye-witnesses showed that sudden altercation ensued between appellant and deceased - no evidence to indicate any previous enmity between parties - single blow of sickle had been inflicted by appellant on back of deceased - incised wound allegedly inflicted by appellant - however opinion of doctor proved that deceased had not died due to direct result of said injury held, appellant is therefore liable to be convicted under section 324 of i.p.c., sentence of 3 years imprisonment reduced to period undergone by appellant considering mental agony suffered by him - during the assessment proceedings, the petitioner could.....orderb.c. varma, j.1. the petitioner is registered as a dealer under the madhya pradesh general sales tax act, 1958. he is also registered as such under section 7(2) of the central sales tax act. during the course of its business, the petitioner purchased iron scrap from bharat heavy electricals ltd., bhopal. according to it, it paid over and above the price of the goods sales tax at the rate of 4 per cent to the vendor, viz., bharat heavy electricals ltd., bhopal. the iron scrap so purchased was sold by the petitioner outside the state of madhya pradesh in the course of inter-state trade and commerce and furnished a declaration in form c. according to the petitioner, the sales were effected to the dealers registered as such under the central sales tax act, 1956. for the period between.....

Judgment:
ORDER

B.C. Varma, J.

1. The petitioner is registered as a dealer under the Madhya Pradesh General Sales Tax Act, 1958. He is also registered as such under section 7(2) of the Central Sales Tax Act. During the course of its business, the petitioner purchased iron scrap from Bharat Heavy Electricals Ltd., Bhopal. According to it, it paid over and above the price of the goods sales tax at the rate of 4 per cent to the vendor, viz., Bharat Heavy Electricals Ltd., Bhopal. The iron scrap so purchased was sold by the petitioner outside the State of Madhya Pradesh in the course of inter-State trade and commerce and furnished a declaration in Form C. According to the petitioner, the sales were effected to the dealers registered as such under the Central Sales Tax Act, 1956. For the period between 27-1-1981 and 31-3-1983, he furnished return to the Sales Tax Officer as required under the M. P. General Sales Tax Act (hereinafter called 'the State Act') and claimed exemption under the State Act by force of Notification No. 3326-3081-VST dated 11-10-1977 published in M. P. Gazette Extraordinary dated 10-11-1977 at page 1478. The exemption claimed was not granted and the sales so effected to the dealers outside the State in the course of inter-State trade and commerce were assessed under the State Act by the Regional Assistant Sales-tax Commissioner, Bhopal. The Assessment order under the State Act is Annexure-D and under the Central Act Annexure-B. In addition to the tax so assessed, a sum of Rs. 60,000/- has also been imposed as penalty under section 18(6) of the State Act read with section 9 of the Central Act on the ground that the petitioner was not registered under section 9(1) of the Central Act. In revision filed by the petitioner before the respondent No. 2, viz., the Additional Commissioner of Sales Tax, penalty was reduced to Rs. 43,000/-. The revisional authority also deleted the enhancement made to the turn over by the Assessing Authority. It was also held that the petitioner cannot be taxed both under the State Act as also under the Central Act and, therefore, directed that after due examination, the excess tax paid be refunded in accordance with the provisions of Rule 49 of the M. P. General Sales-tax Rules. The penalty was also directed to be reduced accordingly. The copy of the revisional order is Annexure-C. The petitioner challenges both these orders Annexure-E passed by the revisional authority, i.e., respondents 1 and 2 respectively, in so far as they adversely affect the petitioner's interest.

2. Shri B. L. Nema, learned counsel for the petitioner, contended that when goods are subjected to the State Sales-tax and then are sold in the course of inter-State trade and commerce they cannot be re-taxed if (a) declaration in Form C is produced and (b) the goods do not change their form. Learned counsel strongly submitted that the Notification dated 11-10-1977, referred to above, exempts the petitioner from payment of Central Sales-tax. Learned counsel made it clear that the petitioner was not making any claim for refund of tax. Instead, the assertion is that the petitioner is not liable to pay any amount as tax under the Central Sales Tax Act, the goods being already subjected to tax under the State Act in the petitioner's hand. As against this, Shri S. L. Saxena, the Additional Advocate-General contended that the goods in the hand of the petitioner would not be and were never subjected to the tax under the State Act. What the petitioner paid to its vendor was only the price of the goods sold. The point raised by Shri Nema is squarely governed by a decision of this Court in Commissioner of Sales Tax v. Bansal Brothers, (1982) 49 S.T.C. 147. In that case also, assessee purchased iron scrap from a registered dealer and paid tax to him as part of the price without furnishing the declarations in the prescribed form. The assessee sold the goods to the consumers. It was contended by the assessee that under section 15 of the Central Sales Tax Act, iron scrap being declared goods, the tax payable under the State Act could not be levied at more than one stage. The Court took into account the definition of 'taxable turn over' in section 2(r) of the State Act. It noticed that one of the deductions in determining the taxable turn over is 'sales to a registered dealer of goods specified in Part I of Schedule II and declared by him in the prescribed form as being intended for resale by him in the State of M. P. and for sale in the course of inter-State trade or commerce.' Iron scrap being goods specified in Part I of Schedule II, the effect of that deduction was found to be that the tax is payable in the case of iron scrap at the last point when the sale is made to the consumer or an unregistered dealer or registered dealer who uses the goods for manufacture or for resale outside the State. Reference was made to a decision of the Supreme Court, in Bhawani Cotton Mills Ltd. v. State of Punjab, (1967) 20 S.T.C. 290, where it has been observed that in Madhya Pradesh the tax on declared goods is leviable at the stage when the purchase is by a consumer or a manufacturer. A more pertinent observation made in that decision is, 'if in such a situation, the assessee because of his own mistake, did not give the requisite declaration to the registered dealer from whom he purchased the goods and also paid the tax, he himself is to be blamed, and the guarantee contained in section 15 of the Central Act that tax would be levied at one stage only, does not come to his help.' Reference was also made to the decision in Rattan Lal and Co. v. Assessing Authority, (1970) 25 STC 136 (SC) to say that the law does not take into account the actions of persons who are negligent or mistaken but only of persons who act correctly, according to law. Had the assessee acted diligently, it could have avoided the payment of tax as part of the sale price to the selling dealer from who it purchased the goods. In the final analysis, it was held that the assessee is liable to pay sales tax in respect of the declared goods which it had purchased from a registered dealer after payment of tax at the full rate and without furnishing to him the declarations in the prescribed form. This decision was followed by another Division Bench of this Court in Commissioner of Sales Tax v. Tahsil Co-operative and Agricultural Processing Society, (1982) 49 S.T.C. 147. Shri Nema referred to yet another Division Bench decision of this Court in Ballabhdas Padder vs. The Commissioner of Sales Tax, Jabalpur, M.C.C. No. 98 of 1984 decided on 4-11-1987, which, in turn, has relied upon a Division Bench decision of the Allahabad High Court in Commissioner of Sales Tax, U. P., Lucknow v. Chokhani Co., (1984) 51 S.T.C. 195. In our view, that decision does not lay down anything contrary to the aforementioned two Division Bench decisions. In Ballabhdas's case, it has been found as a fact that what the petitioner has paid at the time of purchase of goods was not only the price of the iron scrap but also the sales tax leviable. It was, therefore, held that since according to section 15(a) of the Central Act, sales tax in respect of a declared goods under section 14 of that Act is leviable only at one stage, the sale could not be taxed again when sold to the consumer. We have shown above that what the petitioner, in the instant case, paid was the price of the goods although according to him, it contained a sum equal to the amount of sales tax leviable on the alleged purchased price at the relevant time.

3. Learned counsel for the petitioner stressed that the petitioner was claiming exemption from the sales tax under the State Act in view of the Notification dated 11-10-1977, referred to above. This Notification is as follows: -

'Now therefore, in exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (No. 74 of 1956), and in supersession of this Department Notification No. 2353-1765-V-SR dated the 23rd October, 1959, the State Government hereby directs that no tax under the said Act shall be payable by any dealer having his place of business in the State of Madhya Pradesh, in respect of the sales of any goods, other than whole pulses whether with or without husk and paddy, from any such place of business in the course of interstate trade or commerce from the 1st May, 1977, subject to the following conditions, namely:

(i) That the sales are made to a dealer registered under the Central Sales Tax Act, 1956, or to a Department of the Central or State Government on furnishing a declaration in Form 'C or a certificate in Form 'D' as the case may be, appended to the Central Sales Tax Registration and Turnover Rules, 1957, as required by sub-section (4) of section 8 of the said Act; and

(ii) That it is proved to the satisfaction of the assessing authority that there has been no change in the form identity of the goods at the time of their sale in the course of inter-State trade or commerce and that they have already been subjected to tax under any sales tax law in force in the State of Madhya Pradesh.'

What is urged is that since the petitioner has complied with both the conditions mentioned in clauses (i) and (ii) of this Notification, he is not liable to pay any tax under the Central Act. Learned counsel, however, is not right in his contention that both the conditions mentioned in the notification have been complied with by the petitioner. It may be noticed that in accordance with condition No. (ii) appended to that Notification, before the dealer can claim benefit of this Notification, he has to establish that the goods 'have already been subjected to tax under any sales tax law in force in the State of Madhya Pradesh.' Since our finding is that the goods in the hands of the petitioner on his purchase were subjected to no sales tax under the State Act and what the petitioner paid was the price of the goods, it is clear that the petitioner has not complied with the terms of that second condition and, therefore, he is not entitled to any benefit under that Notification and cannot claim exemption from payment of tax.

4. Learned counsel also urged that the petitioner was afforded no opportunity to establish that what he paid at the time of purchase of iron scrap was also the sales tax under the State Act and therefore, the matter be remanded to the assessing authority for the purpose. This contention also must be rejected as we do not find that at any stage such opportunity was claimed or that, if claimed, was denied. During the assessment proceedings, the petitioner could well have placed material to support any such contention. The finding is that what the petitioner paid was the price of the iron scrap purchased by him and even if, by way of mistake, also included an amount equal to the sales tax, he has to blame himself, for at that stage, the goods were not taxable, he well knowing that he was not the last dealer and that he was going to sell the goods to the consumer or to persons outside the State in course of inter-State trade or commerce. This contention also must therefore, be rejected. Our conclusion thus is that the petitioner has rightly been taxed on a sale of iron scrap in the course of inter-State trade or commerce.

5. Learned counsel for the petitioner severely attacked the imposition of penalty as, according to him, although not found liable, the petitioner has paid an amount equal to the sales tax payable on the purchase of the goods by him to his vendor under a mistaken notion. The mistake, according to him, was bona fide and the petitioner had no intention to conceal or evade payment of tax and, therefore, the penalty should not have been levied at all. At any rate, added the learned counsel, the penalty is disproportionate to the fault found. The assessing authority imposed a penalty of Rs. 60,000/- under section 9(2) of the Central Act, read with section 18(6) of the State Act while the tax payable by him was found as Rs. 66,015/-. The revisional authority found the petitioner entitled to certain refund of tax. However, as we have noted above, finding that the petitioner was not registered under section 7(1) of the Central Act, and also because he has not filed the quarterly statements, he was held liable to be penalised but because of the petitioner's entitlement to refund of certain amount, the penalty was reduced to Rs. 43,000/-. In terms of provisions of section 18(6)(a) of the State Act, if the assessing authority is satisfied that the dealer has wilfully failed to apply for registration, it shall direct that the dealer shall pay by way of penalty in addition to the amount so assessed, a sum not exceeding one and a half times that amount. Thus, the penalty imposed is practically equal to the amount of tax assessed, although, as seen above, it could be up to one and a half times of the tax assessed. We find ourselves unable to accept Shri Nema's contention that once a dealer is registered under section 7(2) of the Central Act, registration under section 7(1) is not necessary. Sub-sections (1) and (2) of section 7 of the Central act are as follows:

'7. Registration of dealers - (1) Every dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, and every such application shall contain such particulars as may be prescribed.

(2) Any dealer liable to pay tax under the sales tax law of the appropriate State, or where there is no such law in force in the appropriate State or any part thereof, any dealer having a place of business in that State or part, as the case may be, may, notwithstanding that he is not liable to pay tax under this Act, apply for registration under this Act to the authority referred to in sub-section (1), and every such application shall contain such particulars as may be prescribed.'

It is manifest from the provisions of these two sub-sections of section 7 of the Central Act that any dealer carrying on inter-State trade is liable to pay tax under that Act, and for such dealer, sub-section (1) fixes liability also to be compulsorily registered. Sub-section (2) deals with different types of dealers, i.e. those not liable to compulsorily apply for registration under sub-section (1), may still apply for voluntary registration, if (i) liable to pay tax under the State Act where there is one prevailing (although not liable under the Central Act), and (ii) they are dealers but the State or territory where they carry on business has no sales tax law prevailing. Sub-section (2) of section 7, thus, enables a dealer to apply for registration under that sub-section if he is liable to pay tax under the sales tax law in an appropriate State, and not liable to pay tax under the Central Act. Registration under section 7(1) is, therefore, necessary when a dealer has transaction in the nature of inter-State trade. This Court in Commissioner of Sales Tax v. Amri Brothers, (1979) 44 S.T.C. 200 has held that when a dealer has transaction in the nature of inter-State trade, registration under section 7(1) is necessary. Registration under section 7(2) alone and not under section 7(1) is not sufficient to exclude the liability of a dealer for penalty under section 18(6) of the M. P. General Sales Tax Act, 1958, for failure to apply and obtain registration under section 7(1). If a dealer fails to obtain registration under section 7(1) and indulges in inter-State sales, he exposes himself to the penalty prescribed under the law, notwithstanding the fact that he might have got himself registered under section 7(2). This decision has followed earlier decision of this Court in Commissioner of Sales Tax, M. P. v. Imphalbs Manufacturing Co., 1972 MPLJ 181, where it was expressly held that registration under section 7(2) of the Central Act cannot be deemed to be one under section 7(1), the language of section 7(1) being imperative. The penalty imposed for non-registration under section 7(1) and, consequently, treating the dealer as unregistered was held justified. For these reasons, agreeing with the two aforesaid decisions of this Court, we reject the contention that the registration under section 7(2) of the Central Act must be held sufficient and the petitioner's registration under section 7(1) is not necessary. The petitioner has rightly been held an unregistered dealer when he entered into inter-State trade. Consequently, we uphold the penalty imposed on the petitioner.

6. The petition is, therefore, dismissed. No costs. Security amount be refunded to the petitioner.