1972 (2) TMI 74 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of rule 25C of the Rajasthan Sales Tax Rules - whether it is mandatory or directory for obtaining declaration form for goods sold to registered dealers for resale within the State.

Analysis:
The case involved a reference from the Board of Revenue under section 15 of the Rajasthan Sales Tax Act regarding the interpretation of rule 25C of the Rajasthan Sales Tax Rules. The assessee, a registered dealer, claimed a deduction from the taxable turnover under section 2(s)(iv) for sales to registered dealers for the purpose of resale within the State. The deductions were supported by declarations in form S.T. 17, with some declarations being rejected for not properly filling the commodity sold. The appellate authority allowed further deductions based on additional proper declarations presented by the assessee.

The department filed a revision before the Board of Revenue challenging the deductions. The key issue was whether rule 25C, which required obtaining a declaration form for such sales, was mandatory or directory. The court examined the relevant provisions of the Rajasthan Sales Tax Act and Rules, comparing them with a similar case from Orissa. The court held that the provision in rule 25C was directory, not mandatory, as there was no explicit requirement in section 2(s)(iv) that sales deductions must be supported by declarations as prescribed in the Rules. The court relied on the principle that essential legislative functions cannot be delegated, emphasizing that any provision in the Rules regarding declarations should be treated as directory, following a precedent set by the Supreme Court in the Orissa case.

The court concluded that for the year 1961-62, obtaining a declaration form for goods sold to registered dealers for resale within the State was not mandatory under rule 25C. The court answered the reference question in the affirmative, affirming that the provision of rule 25C was only directory and not mandatory in this context.

This judgment clarifies the interpretation of rule 25C of the Rajasthan Sales Tax Rules and provides guidance on the necessity of obtaining declaration forms for certain sales under the Rajasthan Sales Tax Act. The decision underscores the distinction between mandatory and directory provisions in tax laws and upholds the principle that essential legislative functions cannot be delegated through rules.