1956 (1) TMI 15 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the applicants are considered dealers under the Bombay Sales Tax Act, 1946.
2. The correct application of section 11 of the Act in the assessment process.
3. Disputed goods allegedly despatched outside the Bombay State.

Analysis:

1. The primary issue in this case was whether the applicants qualified as "dealers" under the Bombay Sales Tax Act, 1946. The applicants, engaged in selling goods in Bombay, were assessed for sales tax. The contention raised was that they were not dealers under the Act and should have been assessed differently. The argument that the goods were sold outside Bombay was refuted based on the presence of an agent in Bombay and the delivery of goods to customers there. Citing Supreme Court decisions, the court upheld that habitual selling activities within a state constitute carrying on business, thus affirming the applicants' classification as dealers.

2. The second argument raised concerned the application of section 11 of the Act. The applicants sought exemption under section 11A, claiming that they had not been previously assessed. However, the court clarified that section 11A applies to cases where turnover has escaped assessment, not to initial assessments. Drawing parallels with the Income-tax Act, the court rejected the argument that lack of prior assessment qualifies as "escaped assessment," affirming the use of section 11(5) for initial assessments.

3. The final issue revolved around goods allegedly despatched outside Bombay, for which the applicants sought exemption. The authorities rejected this claim due to insufficient evidence, as only bills and letters from customers were provided without railway receipt numbers. Without these numbers, the authorities could not verify the goods' despatch outside Bombay, leading to the rejection of the contention. Consequently, the court upheld the authorities' decision and dismissed the applications.

In conclusion, the court affirmed the applicants' classification as dealers under the Bombay Sales Tax Act, rejected the application of section 11A for initial assessments, and dismissed the claim regarding goods despatched outside Bombay due to lack of verifiable evidence. The judgment upheld the assessments and penalties imposed on the applicants under the Act.