1969 (2) TMI 159 - SC - VAT and Sales Tax

Whether a registered dealer, who had his head office at Nagpur, under the C.P. and Berar Sales Tax Act, 1947, continued to be a registered dealer in Madhya Pradesh, formed on November 1, 1956, after the reorganisation of the States if his business was partly carried on in the area which went to Maharashtra State and partly in the area which formed part of the new Madhya Pradesh? Held that - Appeal dismissed. Conclusion in the present case is that the respondent cannot be treated as a registered dealer in the new State of Madhya Pradesh on the strength of the registration certificate issued to the respondent before coming into force of the States Reorganisation Act as no place of business in that area was specified in the registration certificate.

Issues Involved:
1. Whether the respondent continued to be a registered dealer in the new State of Madhya Pradesh after the reorganization of states on November 1, 1956.
2. The applicability of the registration certificate under the C.P. and Berar Sales Tax Act, 1947, post-state reorganization.
3. The legal interpretation of the relevant statutory provisions under the States Reorganisation Act, 1956, and the Central Provinces and Berar Sales Tax Act, 1947.

Detailed Analysis:

Issue 1: Whether the respondent continued to be a registered dealer in the new State of Madhya Pradesh after the reorganization of states on November 1, 1956.

The respondent was a dealer in manganese ore with its head office in Nagpur and additional business in Gondia. Both locations were part of the then State of Madhya Pradesh before November 1, 1956. Post-reorganization, Nagpur became part of the State of Bombay. The respondent became a registered dealer in the new State of Madhya Pradesh on March 8, 1958. The Sales Tax Officer, Chhindwara, assessed the respondent for the period from November 1, 1956, to July 3, 1958, under various sections of the Central Provinces and Berar Sales Tax Act, 1947, imposing a tax of Rs. 27,697.28 and a penalty of Rs. 3,000. The Sales Tax Officer's view was that the respondent was liable to pay tax as he continued to do business in the new State of Madhya Pradesh and remained a registered dealer.

On appeal, the Appellate Assistant Commissioner affirmed this view, but the Board of Revenue, Madhya Pradesh, held that the respondent could not be treated as a registered dealer in two states by virtue of the same registration certificate. Consequently, the Board of Revenue remanded the case for fresh assessment. The High Court of Madhya Pradesh, by its judgment dated April 27, 1966, held that the respondent could not be treated as a registered dealer with respect to the area in the new State of Madhya Pradesh as no place of business from that area was specified in its certificate.

Issue 2: The applicability of the registration certificate under the C.P. and Berar Sales Tax Act, 1947, post-state reorganization.

The High Court answered that if a registered dealer carried on business in places not disclosed in its registration certificate, he would have to be treated as an unregistered dealer vis-a-vis those places. Therefore, the respondent could not be treated as a registered dealer in the new State of Madhya Pradesh as no place of business in that area was specified in the registration certificate. The court emphasized that the certificate of registration is granted with reference to the place of business or places of business of the dealer and not with reference to the whole area of the State.

Issue 3: The legal interpretation of the relevant statutory provisions under the States Reorganisation Act, 1956, and the Central Provinces and Berar Sales Tax Act, 1947.

The court examined sections 119 and 121 of the States Reorganisation Act, 1956, and sections 2(c), 2(f), 4(1), 8, and 17 of the Central Provinces and Berar Sales Tax Act, 1947. Section 119 of the States Reorganisation Act states that the provisions of Part II shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies. Section 121 provides that any court, tribunal, or authority required to enforce such law may construe the law to facilitate its application in relation to any State formed or territorially altered by the provisions of Part II.

Section 2(c) of the Central Provinces and Berar Sales Tax Act defines a "dealer" as any person carrying on the business of selling or supplying goods in Madhya Pradesh. Section 8(1) states that no dealer shall carry on business unless he has been registered and possesses a registration certificate. The court noted that the registration certificate specifies the location of the business and any branch of the business. Rule 7 of the Rules framed under section 28 of the Act requires an application for registration to be made in Form I, which includes the main place of business and additional places of business. Section 17 requires a registered dealer to inform the prescribed authority of any change in the place of business.

The court concluded that the registration certificate is granted with reference to the place of business or places of business of the dealer and not with reference to the entire area of the State. Therefore, if a registered dealer carries on business in places not disclosed in the registration certificate, he will have to be treated as an unregistered dealer vis-a-vis those places.

Conclusion:

The Supreme Court upheld the judgment of the High Court of Madhya Pradesh, stating that the respondent could not be treated as a registered dealer in the new State of Madhya Pradesh based on the registration certificate issued before the States Reorganisation Act came into force, as no place of business in that area was specified in the certificate. The appeal was dismissed with costs.

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