1975 (11) TMI 136 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of Notification No. ECO-1060/A-2380(a)-62-XIII dated 7th April, 1964, amended by the notification issued on 28th December, 1959 - Correctness of the operative date for the certificate under Entry 39.

Analysis:
The judgment pertains to a reference under section 61(1) of the Bombay Sales Tax Act, 1959, involving the interpretation of an amendment to a notification regarding the effective date of a certificate issued under Entry 39. The original question submitted for determination was reframed by the court to clarify the issue at hand. The notification dated 28th December, 1959, empowered the State Government to exempt specified sales or purchases from tax under certain conditions. Entry 39, inserted in the notification on 7th April, 1964, exempted sales of machinery, dyes, and chemicals by a registered dealer to another registered dealer who manufactures specified goods, subject to conditions. The court analyzed the conditions for exemption and the timeline of the certificate issuance to resolve the dispute regarding the effective date of the certificate.

The court rejected the interpretation by the Tribunal that the certificate should be effective from the date of the amending notification, emphasizing that the exemption under Entry 39 applies only if the purchasing dealer holds the requisite certificate at the time of sale. The liability to pay tax arises at the point of sale, and subsequent certification of the purchasing dealer does not negate the tax liability already accrued to the selling dealer. The court distinguished the case law cited by the respondents, highlighting the specific conditions of the exemption under Entry 39 and the necessity for the purchasing dealer to possess the certificate at the time of sale to qualify for exemption.

The court discussed the retrospective operation of the certificate issued by the Sales Tax Officer from the date of the application for the certificate, noting that such action benefits both the purchasing dealer and the vendor by relieving them from immediate tax obligations. The court found no legal impediment to the retrospective operation of the certificate in the notification. Ultimately, the court answered the reframed question in the negative, indicating that the certificate issued under Entry 39 should only operate from the date of its issuance. The respondents were directed to pay the costs of the reference, and the reference was answered in the negative.