1977 (6) TMI 88 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the assessment order under the Central Sales Tax (Amendment) Act, 1969.
2. Applicability of Section 10 of the Central Sales Tax (Amendment) Act, 1969.
3. Collection versus non-collection of sales tax.
4. Recovery proceedings under the Kerala Revenue Recovery Act.
5. Interpretation of legal terms such as "levy," "assessment," and "collection."

Detailed Analysis:

1. Validity of the Assessment Order:
The primary issue revolves around the validity of Exhibit P1, the order of the Sales Tax Officer assessing the petitioner to sales tax under the Central Sales Tax (Amendment) Act, 1969. The Sales Tax Officer found that the petitioner had effected inter-State sales amounting to Rs. 1,27,752.09, but only Rs. 50,536.02 was covered by valid C forms. The remaining turnover was either supported by defective C forms or not covered by any C forms at all. Consequently, the assessment was completed based on these findings, leading to a higher tax rate for sales not covered by valid C forms.

2. Applicability of Section 10:
Section 10 of the Central Sales Tax (Amendment) Act, 1969, provides exemption from liability to pay tax under certain conditions. The appellate authority and the learned Judge had differing views on whether the petitioner met these conditions. The appellate authority concluded that the petitioner did not qualify for exemption because he had charged Central sales tax on all inter-State sales. In contrast, the learned Judge believed that the petitioner had not collected sales tax from customers, thus satisfying the requirements of Section 10.

3. Collection versus Non-collection of Sales Tax:
The core argument was whether the petitioner had "collected" sales tax. The learned Government Pleader contended that billing the customer for the tax amount constituted collection, even if the tax was not actually received. The court agreed with this argument, stating that the inclusion of the tax amount in the bills indicated the petitioner's belief that the amounts were collectible as sales tax. Therefore, the petitioner did not meet the conditions for exemption under Section 10, as the non-collection was not based on the ground that the tax was not collectible.

4. Recovery Proceedings under the Kerala Revenue Recovery Act:
Following the assessment, recovery proceedings were initiated under the Kerala Revenue Recovery Act, leading to the issuance of a demand notice for attachment (Exhibit P6). The writ petitioner sought to quash these proceedings, but the court found that the petitioner did not satisfy the conditions for exemption under Section 10, thus justifying the recovery proceedings.

5. Interpretation of Legal Terms:
The court delved into the interpretation of legal terms such as "levy," "assessment," and "collection." Citing previous judgments, the court distinguished between these terms, noting that "levy" is broader than "assessment" and does not necessarily include "collection." The court referenced the Supreme Court's decisions in Gannon Dunkerley & Co., Madras (P.) Ltd. v. Sales Tax Officer, Mattancherry, and Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd., to elucidate these distinctions.

Conclusion:
The court concluded that the petitioner did not meet the conditions for exemption under Section 10 of the Central Sales Tax (Amendment) Act, 1969. The inclusion of the tax amount in the bills indicated that the petitioner believed the tax was collectible, thus disqualifying him from exemption. Consequently, the appeal was allowed, the order of the learned Judge was set aside, and the original petition was dismissed. The court also clarified that recovery proceedings could only be taken against the assets of the deceased in the hands of the writ petitioner, although this principle was deemed obvious and did not require further clarification. The appeal was allowed with no order as to costs.

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