1974 (12) TMI 63 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of rules 40 and 45 of the Bombay Sales Tax Rules, 1959.
2. Entitlement to set-off for stock held by a branch office.
3. Legal implications of separate registration certificates for head office and branch office.
4. Definition and implications of the term "assessee" under rule 40.

Issue-wise Detailed Analysis:

1. Interpretation of Rules 40 and 45 of the Bombay Sales Tax Rules, 1959:
The court examined the provisions of the Bombay Sales Tax Act, 1959, and the corresponding rules. Rule 40(1) allows a registered dealer to claim a set-off for goods in stock on the appointed day if certain conditions are met. Rule 45(1) outlines the conditions a dealer must comply with to be entitled to a set-off, including furnishing a statement in form 32 and maintaining a true account of purchases.

2. Entitlement to Set-off for Stock Held by a Branch Office:
The respondent-company's head office in Bombay claimed a set-off for goods purchased before the appointed day and held in stock by its Ahmedabad branch. The Sales Tax Officer rejected the claim, stating it should have been made by the Ahmedabad branch. However, the Tribunal concluded that the right to claim set-off belonged to the head office, not the branch.

3. Legal Implications of Separate Registration Certificates for Head Office and Branch Office:
The court analyzed the requirement for separate registration certificates for different places of business under rule 7(3) of the Bombay Sales Tax Rules, 1959. It clarified that obtaining separate certificates does not create separate registered dealers. The head office and branch office are part of the same legal entity, and the registered dealer remains the same. The separate registration is for administrative convenience and does not affect the dealer's overall legal status.

4. Definition and Implications of the Term "Assessee" under Rule 40:
The term "assessee" in rule 40(1) is given a special meaning, referring to a "registered dealer." The court emphasized that the term must be interpreted as "registered dealer" throughout rule 40, irrespective of its ordinary meaning. This interpretation supports the conclusion that the head office, as the registered dealer, is entitled to claim the set-off.

Conclusion:
The court held that the head office of the respondent-company, Indokem Private Limited, was entitled to claim the set-off for the taxes paid on the purchases of goods held in stock by its Ahmedabad branch. The court rejected the arguments that separate registration certificates created separate taxable entities or that the branch office should claim the set-off. The taxpayer, Indokem Private Limited, remained a single legal entity, and the sales made by the branch were considered sales of the company. The question was answered in the affirmative, and the applicant was ordered to pay the costs of the reference to the respondents.

Reference Answered in the Affirmative.