Ram Lawat Shaw v. Commercial Tax Officer And Others

Dipak Kumar Sen, J.:— At the instance of the parties this application was treated as an adjourned application in the list on the 26th March, 1987. It is recorded that the respondents do not admit the allegations in the petition as no affidavit was filed in opposition to the petition.

2. At the instance of the parties the appeal was also treated on the day's list. By consent, filing of paper book was dispensed with and the undertaking given in that behalf is directed to stand discharged. The appeal was heard along with the application. The records and pleadings before the first court were produced and considered. The case of the appellant. Ram Lawat Shaw, is that he is a registered dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941, the West Bengal Sales Tax Act, 1954, and the Central Sales Tax Act, 1956. The sales tax Assessments of the appellant have been completed by the commercial tax authorities upto the period of four quarters ending on the 1st March, 1982. The appellant claims to have filed his sales tax returns thereafter, and the last return filed is in respect of the four quarters ending on the 31st December, 1986. The tax payable by the appellant, on the basis of the returns filed by him has been duly paid.

3. On the 8th January, 1987, the appellant made an application in the prescribed form before the commercial tax authorities concerned under rule 27AA of the Bengal Sales Tax Rules, 1941, for issue of declaration forms. In the said application all necessary particulars, statements and informations were furnished. The appellant appeared before the commercial tax authority concerned in support of his application and produced the necessary records. The said application of the appellant was disposed of by an order passed by the Commercial Tax Officer, Manicktola Charge, the respondent No. 1 in this appeal, by the following order:

“During checking of the register XXIII, it is seen that the dealer issued the following declaration forms in form XXIV of purchases of goods as indicated below:

Form No. D/2 833804 ijsed bus.

Form No. E/1 493260 old and used bus.

Form No. E/1 493262 tractor.

Shri Shaw admits that by breaking these vehicles he sold tyres along with other parts of vehicle and he did not pay tax on sale of tyres as he states the goods are notified commodity which he has locally purchased. In this connection it may be mentioned that he has issued form for the entire value of the bus or, tractor. The dealer is not manufacturer. He is reseller. And he issues form XXIV for his purchase. As a reseller he must sell goods as he purchases.

So he sells used vehicle. And he must pay tax on all sales as he is enjoying the benefit of form XXIV for purchase of entire vehicle. Under the circumstances he has not paid full tax in respect of entire sale. In some returns he has not shown, in portion of sale which he says sale of tyres and in some returns he has deducted the sale of so-called tyres. Naturally the returns are incorrect.

The dealer is asked to rectify the returns and pay the taxes.

So long as the returns are not corrected and full tax on sale is paid, application for declaration form is kept pending.”

4. Being aggrieved by the said order, the appellant moved this Court in an application under article 226 of the Constitution on the 9th March, 1987. On that date learned Advocates appearing for the parties were heard and the respond-ents, viz., the commercial tax authorities, were directed to produce their records on the 13th March, 1987. On that date, namely, 13th March, 1987, after hearing the parties, the learned Judge in the first court dismissed the said writ application. In his order dated the 13th March, 1987 (Ram Lawat Shaw v. Commercial Tax Officer, printed at page 233 supra), the learned Judge held that after the returns had been filed by the appellant the correctness thereof was not subject to scrutiny at the time of issue of declaration forms and the respondent No. 2 was wrong in proceeding as he did. But the learned Judge, however, held that it appeared from the records that the appellant who had previously obtained declaration forms from the Commercial Tax Officer and had used the same for the purpose of purchase, did not include in his returns the sales of the items purchased, and that he had obtained such declaration forms as a reseller. It was held that it was a fit case where the Commercial Tax Officer could have withheld the declaration forms in accordance with the provisions of rule 27AA(2)(a)(i) of the Bengal Sales Tax Rules, 1941, on the ground that the declaration forms issued had not been used bona fide. The learned Judge affirmed the decision of the respondent No. 1 and held that the latter had sufficient discretionary power to withhold declaration forms and that the writ court should not interfere with such jurisdiction. The present appeal is from the said order dated the 13th March, 1987.

5. At the hearing of this appeal, learned Advocate for the appellant drew our attention to the relevant portions of rule 27AA of the Bengal Sales Tax Rules, 1941, which are noted hereafter:

“Rule 27AA. (1) For obtaining declaration forms referred to in sub-rule (1) or sub-rule (la) of rule 27A or sub-rule (2) or sub-rule (3) of rule 27C or clause (85) of rule 3, a registered dealer or the owner or representative of an undertaking, as the case may be, shall apply in writing to the appropriate Commercial Tax Officer stating separately his requirements for each kind of such forms and shall furnish such other particulars, statements and information and produce such other documents as the Commercial Tax Officer may require for the purpose of satisfying himself about the bona fide use of such forms of all kinds issued to the applicant on previous occasions and the bona fide nature of the applicant's requirement of such forms applied for on the present occasion.

(2)(a) If for reasons to be recorded in writing—

(i) the Commercial Tax Officer is not satisfied that the applicant for declaration forms made bona fide use of such forms of all kinds previously issued to him or that he bona fide requires such forms applied for, the Commercial Tax Officer may reject the application; ………….

(c) If the applicant for declaration forms has at the time of making the application defaulted in furnishing any return or returns, together with the receipted challan or challans showing payment of tax, surcharge and additional surcharge due from him according to such return or returns, for the furnishing of which the prescribed date or dates, or the extended date or dates, if any, have already expired, the Commercial Tax Officer shall withhold the issue of declaration forms to him until such time as he furnishes—

(i) such return or returns, together with such receipted challan or challans, and

(ii) any other return or returns, together with the receipted challan or challans showing payment of the tax, surcharge and additional surcharge due according to Such return or returns, for the furnishing of which the prescribed date or dates, or the extended date or dates, if any, may have expired after the date of the application

6. Construing the provisions of the said rule, learned Advocate for the appellant submitted that in the instant case, the respondent No. 1 admittedly proceeded under rule 27AA(2)(c) as he had withheld the issue of the declaration forms to the appellant. In the event, the respondent No. 1 had proceeded under rule 27AA(2)(a)(i), he could not have withheld the issue of the declaration forms but would be bound to reject the application of the appellant.

7. Learned Advocate for the appellant submitted further that it was apparent from the facts on record and the facts as found by the respondent No. 1 that the appellant had bona fide used the declaration forms for purchase of commodities and had resold parts thereof. There was no allegation that he had used the declaration forms issued to him in a mala fide manner. The only allegation against the appellant was that he had not shown the sales of the items purchased by him in his return. There was no finding or allegation that the declaration forms had been utilised mala fide.

8. Learned Advocate for the appellant submitted that the respondent No. 1 was not entitled to withhold the issue of the declaration forms and call upon the appellant to rectify his return at this stage and pay additional tax on the basis of further sales to be included in his return. The same could be done only at the time, of assessment. At the time of assessment the return filed by the appellant may not be accepted. The appellant may be assessed to sales tax for an amount higher than that declared and if necessary, his return could be rejected and a penalty could be imposed. There was no provision in the statute which permitted the respondent No. 1 to call upon the appellant to rectify his return, before assessment.

9. Learned Advocate for the commercial tax authorities contended to the contrary. He submitted that the declaration forms were issued to the appellant on the basis that the appellant was a reseller and that he would sell the goods. The user of the declaration forms by the appellant in the facts cannot be held to be bom fide.

10. On a consideration of the facts as on record, the statutory provisions as noted above and the submissions of the learned Advocates for the parties, it appears to us that the contentions raised on behalf of the appellant are of substance and cannot be brushed aside. Admittedly, the respondent No. 1 had power to withhold the issue of declaration forms only under section 27AA(2)(c). He could withhold the issue of the declaration forms only on the ground that the appellant had defaulted in furnishing any return with receipted challans showing the payment of tax due from him according to such return or returns, for the furnishing of which the dates had expired. If the respondent No. 1 came to the conclusion that the appellant had not made bona fide use of the declaration forms previously issued to him then the respondent No. 1 could have rejected the application which he has not done.

11. It cannot be said on the facts that the appellant has not used the declaration forms bona fide. The appellant has utilised the declaration forms for purchase of used motor vehicles. He has broken up the said motor vehicles and sold parts thereof. The contention of the appellant is that as the items sold by him are notified commodities purchased locally he is not liable to pay any sales tax on such sales. This contention may be right or wrong but it cannot be said that in taking the stand as aforesaid the appellant had utilised the declaration forms not in a bona fide manner.

12. Under the statutory provisions, the respondent No. 1 was not entitled, while issuing declaration forms to call upon the appellant to rectify his returns and pay additional taxes. This is not provided in rule 27AA of the Rules nor in any other section of the statute.

13. It is nobody's case that the appellant has defaulted in furnishing any return with receipted challans showing payment of tax.

14. For the reasons above, the appeal succeeds. We set aside the order dated the 13th March, 1987, of the first court which is under appeal. The application of the appellant is allowed. The impugned order of the respondent No. 1 dated the 8th January, 1987, is quashed and directed to be set aside. We, however, make it clear that we have not adjudicated on the question whether the appellant is liable to pay sales tax on the sale of the parts of the motor vehicles and it would be open to the commercial tax authorities concerned to assess the appellant to sales tax in accordance with law. The Commercial Tax Officer is directed to issue the declaration forms applied for by the appellant if the said application is otherwise in accordance with law. All parties and the Commercial Tax Officer to act on a signed copy of the operative part of this judgment. Each party will pay and bear its own costs.

Shyamal Kumar Sen, J.:— I agree.

15. Appeal allowed.