1976 (2) TMI 165 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the certificate was wrongly filed in the name of the State of West Bengal.
2. Whether the inclusion of claims for penalties due to late submission or non-submission of returns under the Central Sales Tax Act, 1956, invalidates the certificate.
3. Whether the certificate was improperly filed under both sections 4 and 5 of the Bengal Public Demands Recovery Act, 1913.

Detailed Analysis:

1. Certificate Filed in the Name of the State of West Bengal:
The primary issue was whether the certificate was correctly filed in the name of the State of West Bengal as the certificate-holder. The court analyzed Section 9 of the Central Sales Tax Act, 1956, which stipulates that the tax levied by the Government of India is collected by the State on behalf of the Central Government. The court noted that the State acts as an agent for the Central Government in assessing, reassessing, collecting, and enforcing the payment of tax, but this does not transform the liability into a debt due to the State Government. The court concluded that the certificate-holder should not have been the State of West Bengal, rendering the certificate filed in its name "bad and without authority of law." This view was supported by the Division Bench's observations in Abanindra Kumar Maity v. A.K. Biswas.

2. Inclusion of Penalties for Late Submission or Non-Submission of Returns:
The second issue was whether the certificate's inclusion of penalties for late submission or non-submission of returns under the Central Sales Tax Act, 1956, invalidated the certificate. The court referenced its own decision in Shri Mohan Lal Chokhany v. Commercial Tax Officer and the Supreme Court's decision in Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra, which established that penalties for late submission or non-submission of returns under the Central Sales Tax Act are not legally permissible. Despite this, the court examined whether the entire certificate becomes invalid if it includes both valid and invalid claims. Section 9 of the Bengal Public Demands Recovery Act, 1913, allows a certificate-debtor to deny liability in whole or in part, implying that a certificate containing both valid and invalid claims does not become entirely void. The court rejected the contention that the entire certificate should be quashed due to the inclusion of invalid claims.

3. Improper Filing under Both Sections 4 and 5:
The third issue was the irregularity of filing the certificate under both sections 4 and 5 of the Bengal Public Demands Recovery Act, 1913. The court acknowledged that this was an irregularity but deemed it a defect in form. Referring to the Bengal Public Demands Recovery (Validation of Certificates and Notices) Act, 1961, which validates certificates despite defects, errors, or irregularities in form, the court concluded that this irregularity did not invalidate the certificate.

Conclusion:
The court quashed the certificate based on the first objection, i.e., it was incorrectly filed in the name of the State of West Bengal. However, this decision did not prevent the respondents from initiating fresh proceedings in accordance with the law. The rule was made absolute to the extent indicated, with no order as to costs.