1975 (12) TMI 149 - HC - VAT and Sales Tax

Summary

Issues:
Application under section 61(1) of the Bombay Sales Tax Act, 1959, read with section 9(2) of the Central Sales Tax Act, 1956 for reference of questions to the court.

Analysis:
The case involved an application by the Commissioner of Sales Tax for the State of Maharashtra under section 61(1) of the Bombay Sales Tax Act, 1959, seeking a direction for the Sales Tax Tribunal to refer four questions to the court. The dispute arose from the assessment of inter-State sales tax on certain transactions and the subsequent forfeiture of a portion of the amount collected as sales tax by the Sales Tax Officer. The Sales Tax Tribunal ruled that if the transactions were not sales, then no sales tax could have been collected, and thus, forfeiture was not justified. Additionally, the Tribunal held that under the Central Sales Tax Act, 1956, there was no authority to forfeit such amounts collected in contravention of the Act. The petitioner sought a reference based on the interpretation of section 9A of the Central Sales Tax Act, 1956, and the applicability of forfeiture provisions under the Bombay Sales Tax Act, 1959.

The Supreme Court precedent in Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra clarified that assessing authorities under the Central Sales Tax Act, 1956, lacked the power to forfeit amounts collected in contravention of section 9A or impose penalties, as no explicit provisions existed for such actions. The petitioner initially raised four questions for reference but later focused solely on the issue of whether the collection of Central sales tax on transactions deemed not to be sales constituted a contravention of section 9A. The petitioner argued that despite the inability to forfeit or penalize the respondents, prosecution remained an option. However, the court found that the Tribunal's decision was not academic, as it addressed pivotal points. The Tribunal correctly ruled that without actual sales, no tax collection could occur under the Central Sales Tax Act, rendering section 9A inapplicable.

Furthermore, the court rejected the notion of a reference in this matter since the Supreme Court's decision precluded forfeiture or penalties, leaving only the option of prosecution. The court highlighted that under section 61(1) of the Bombay Sales Tax Act, a reference could only pertain to tax liability, penalties, or forfeiture, not prosecution. As the requested reference did not align with the specified criteria, the application was dismissed, and the petitioner was directed to pay costs to the respondents.

In conclusion, the court dismissed the application, emphasizing that the inability to forfeit or penalize the respondents did not warrant a reference, as prosecution was the sole remaining recourse. The judgment underscored the limitations on references under the relevant tax laws, focusing on tax liability, penalties, or forfeiture, rather than prosecution.