1970 (4) TMI 146 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 8 of the Central Sales Tax Act regarding concessional rates for unregistered dealers in inter-State sales.

Analysis:
The judgment addressed the question of whether an unregistered dealer under the Central Sales Tax Act in U.P. can be given concessional rates of tax for sales made to a registered dealer outside the State, provided the unregistered dealer procured 'C' forms from the purchasers. The case involved an assessee who was initially a registered dealer but later became a partnership without registration. Despite filing 'C' forms, the assessee was assessed at 7% tax instead of the concessional 1%. The Assistant Commissioner allowed the appeal, stating that the concessional rate applied to unregistered dealers selling to registered dealers with 'C' forms. The Commissioner sought a reference under section 11(1), which was declined, leading to a court application under section 11(4) for opinion on the matter.

The judgment analyzed section 8 of the Central Sales Tax Act, which stipulates a 1% tax rate for sales to registered dealers and 7% for others, subject to conditions. It highlighted that the concessional rate is available if sales are to a registered dealer and the goods sold match those in the registration certificate. The judgment emphasized that registration is necessary for tax liability but does not control the rate specified in section 8. The Act defines a dealer as any person in the business of buying or selling, including the government, and registration is a separate process. Failure to register bars tax collection and attracts penalties but does not affect the tax rate. The judgment rejected the argument that only registered dealers are liable for tax, as it would allow unregistered dealers to evade tax.

Furthermore, the judgment discussed the necessity of registration for dealers liable under the Central Sales Tax Act and the option for others to register if liable under State law. It clarified that an unregistered dealer can include the tax in the sale price for inter-State sales, even if they must pay it later. The judgment differentiated this case from precedents where the focus was on the responsibility of selling dealers regarding the use of goods by purchasing dealers. It concluded that an unregistered dealer selling to a registered dealer with 'C' forms is entitled to the concessional rate, answering the question in favor of the assessee and awarding costs accordingly.