1975 (3) TMI 121 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Scope and effect of the proviso to the notification dated 30th June 1965.
2. Alleged discrimination between registered dealers and unregistered dealers.
3. Status of petitioners as registered dealers after deletion of items from their registration certificates.

Issue-wise Detailed Analysis:

1. Scope and Effect of the Proviso to the Notification:
The first contention was whether the proviso to the notification dated 30th June 1965 applied only to the stock of tyres and tubes existing with the petitioners on that date or also to subsequent purchases. The court held that the notification was intended to operate prospectively and applied to all sales of tyres and tubes purchased subsequent to 30th June 1965. The purpose of the notification was to shift the levy from the point of last sale to the point of first sale by an importer or manufacturer. The language of the notification, stating that "the turnover in respect of all kinds of tyres and tubes... shall be liable to tax only at the point" mentioned, clearly indicated its prospective operation. Thus, the first contention was without substance and was not accepted.

2. Alleged Discrimination Between Registered Dealers and Unregistered Dealers:
The second contention was that if the proviso was held to be prospective, it would result in discrimination between registered and unregistered dealers. The court noted that both registered and unregistered dealers are liable to tax if their gross turnover exceeds the taxable quantum. However, an unregistered dealer is prohibited from carrying on the business of selling goods and cannot collect tax from purchasers. The court held that even if the turnover on sales by an unregistered dealer was not liable to tax under the notification, the doctrine of discrimination did not apply as unregistered dealers are not similarly situated as registered dealers. Registered dealers can collect and pay tax, while unregistered dealers are prohibited from selling goods and collecting tax, and are subject to penalties. Thus, the second contention was also without force and was not accepted.

3. Status of Petitioners as Registered Dealers After Deletion of Items:
The third contention was that the petitioners ceased to be registered dealers for the items deleted from their registration certificates. The court examined the provisions of the Sales Tax Act and the Rules regarding registration and concluded that the deletion of "tyre and tube" from column 3 of the registration certificates did not amount to cancellation of the registration. The petitioners continued to be registered dealers carrying on the business of selling "retail old motor parts," which included tyres and tubes. The deletion only disentitled them from claiming the benefit of section 5(2)(a)(ii) for tyres and tubes but did not affect their status as registered dealers for other purposes of the Act. The court also referred to previous judgments and held that the petitioners remained registered dealers in respect of tyres and tubes by virtue of the entry in column 2 of their certificates. Thus, the third contention was untenable and was not accepted.

Conclusion:
All the contentions raised by the petitioners were rejected. The two Letters Patent Appeals and the nine Civil Writ Petitions were dismissed without costs.