1966 (12) TMI 64 - HC - VAT and Sales Tax

Issues Involved:
1. Commencement of dealer's liability to pay tax under section 4 of the Bihar Sales Tax Act, 1947.
2. Interaction between section 4 and section 14A of the Bihar Sales Tax Act.
3. Dependence of tax payment on the dealer's realization of the tax.

Detailed Analysis:

Issue 1: Commencement of Dealer's Liability to Pay Tax
The primary issue was whether the dealer's liability to pay tax under section 4 of the Bihar Sales Tax Act, 1947, commences from the date the liability accrued or from the date of the grant of the registration certificate. The court held that the liability of the dealer to pay tax under section 4 of the Act undoubtedly commenced from the date on which that liability accrued. However, if the dealer became a registered dealer on the date of assessment, then his assessment for the period from the date of his application for registration till the date of the actual granting of the certificate would be subject to the conditions laid down in sub-section (5) of section 13.

Issue 2: Interaction Between Section 4 and Section 14A
The second issue was whether the provisions of section 4 of the Act are controlled by the provisions of section 14A, thereby shifting the date of liability under section 4 to the date of the grant of the registration certificate. The court clarified that the answer to this question is found in the answer to the first question. It emphasized that while section 4 establishes the liability to pay tax from the date it accrues, the assessment for the period between the application for registration and the issuance of the certificate depends on the fulfilment of conditions in section 13(5).

Issue 3: Dependence of Tax Payment on Realization of Tax
The third issue was whether the payment of tax by a dealer under the Act is dependent on his having realized the tax. The court concluded that ordinarily, the payment of tax by a dealer is not dependent on his having realized the tax. Nonetheless, if the dealer is prevented from realizing the tax due to the delay by the Sales Tax Department in granting the registration certificate, the authority concerned has the discretion not to assess him to tax for the period of the delay.

Additional Observations:
The court noted the peculiar situation where a dealer, liable to pay tax from a specific date, faces delays in obtaining the registration certificate due to no fault of his own. It highlighted the legislative awareness of this time-lag and the provisions made for such circumstances, particularly sections 13(5), 14A, and 15A. These sections form a scheme to balance penalizing dishonest dealers and providing concessions to honest dealers whose registration is delayed without their fault.

The court also discussed the implications of section 14A, which prohibits an unregistered dealer from realizing any amount by way of tax and imposes penalties for contraventions. It emphasized that assessing a dealer for a period prior to the date of registration, when the delay is not his fault, would be inequitable. The court maintained that the assessing authority has the discretion to fix the date of liability to pay sales tax differently from the date of actual issuance of the registration certificate, based on the circumstances.

Conclusion:
The court answered the questions as follows:
1. The dealer's liability to pay tax under section 4 commences from the date the liability accrued, but assessment for the period between application and issuance of the certificate is subject to section 13(5).
2. The provisions of section 4 are not controlled by section 14A to shift the date of liability.
3. Payment of tax is not dependent on realization of tax, but the authority has discretion not to assess tax for the delay period caused by the department.

The reference was disposed of accordingly, with no order for costs.

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