1973 (7) TMI 76 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Assessment under section 11 of the Punjab General Sales Tax Act, 1948.
2. Liability to pay tax during the period the registration application remained pending.
3. The impact of the delay in issuing the registration certificate on the tax liability.

Issue-wise Detailed Analysis:

1. Assessment under Section 11 of the Punjab General Sales Tax Act, 1948:
The primary question was whether the applicant could be assessed under section 11 of the Act. The court concluded that the assessment was valid under sub-sections (1), (2), and (3) of section 11. The assessee filed the return when he was a "registered dealer," thus fulfilling the procedural requirements.

2. Liability to Pay Tax During the Period the Registration Application Remained Pending:
The court examined whether a dealer is liable to pay tax for the period during which the application for registration is pending. It was determined that the liability to pay tax arises as soon as a dealer's gross turnover exceeds the permissible limit as per section 4 of the Act. The court emphasized that the liability is not contingent on the issuance of the registration certificate. The dealer's liability to pay tax commences from the date on which the turnover exceeds the taxable quantum, irrespective of the pending application for registration.

3. Impact of Delay in Issuing the Registration Certificate on Tax Liability:
The court acknowledged that there could be a time-lag between the filing of the application for registration and the issuance of the certificate. However, this delay does not exempt the dealer from the tax liability for the intervening period. The court noted that section 7(1) of the Act requires a dealer to be registered and possess a registration certificate to carry on business, but the delay in issuing the certificate does not negate the tax liability. The court also referenced the Patna High Court's decision, which clarified that the liability for payment of tax arises as soon as the dealer's gross turnover exceeds the limit, and the delay in registration does not alter this liability.

The court further discussed the discretion of the assessing authority to consider any hardships faced by the dealer due to the delay in issuing the registration certificate. However, in this particular case, the assessee did not claim any adverse effect due to the delay, nor did he seek relief on this ground.

Conclusion:
The court answered the reference in the affirmative, stating that the liability of the assessee to pay tax was not dependent on the issuance of the registration certificate and arose as soon as the gross turnover exceeded the limit fixed by the Act. The assessment under section 11 was valid as the return was filed when the assessee was a "registered dealer." The department was awarded costs of the proceedings from the assessee.