1970 (12) TMI 78 - HC - VAT and Sales Tax

Summary

Issues:
1. Admissibility of evidence and vital defects in declarations for deductions under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 for sales to Messrs Roy & Co. prior to and after 7th January, 1957.

Analysis:
The case involved a reference under section 21(1) of the Bengal Finance (Sales Tax) Act, 1941, regarding deductions claimed by a registered dealer for sales to Messrs Roy & Co. The deductions were claimed under section 5(2)(a)(ii) of the Act, which required sales to a registered dealer of specified goods for specified purposes, supported by a duly filled declaration form. The Commercial Tax Officer and the Assistant Commissioner disallowed the deductions for different periods due to various reasons. The Commercial Tax Officer highlighted issues such as incomplete declaration forms, lack of order or challan evidence, and cash payments deviating from normal trade practices. The Assistant Commissioner echoed these concerns, emphasizing the absence of purchase orders and delivery challans. The Additional Commissioner upheld these views, noting the dealer's admission of missing challans and the significance of indicating the purpose of purchase in declaration forms.

Moving to the period after 7th January, 1957, the Commercial Tax Officer disallowed deductions based on declaration forms issued after the cancellation of the purchasing dealer's registration. The Assistant Commissioner and the Additional Commissioner concurred, emphasizing the defects in the declaration forms and the lack of authority for tax-free purchases post-cancellation. The Member, Board of Revenue, also supported this stance, emphasizing that the declaration forms did not protect the dealer and were issued after registration cancellation. The courts found that the sales occurred after registration cancellation, and the absence of stated purposes of purchase in the defective declaration forms was a crucial factor in justifying the refusal of deductions.

In conclusion, the courts affirmed the tax authorities' decisions to reject the deduction claims for both periods, citing the lack of reliable documents, incomplete declaration forms, and sales post-registration cancellation as valid reasons. The judgment favored the respondent, requiring the applicant to pay the costs of the reference.

This detailed analysis of the judgment highlights the critical issues surrounding the admissibility of evidence, vital defects in declarations, and the justifications for disallowing deductions under the Bengal Finance (Sales Tax) Act, 1941, for sales to Messrs Roy & Co. before and after 7th January, 1957.