1977 (2) TMI 118 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment of the High Court of Bombay involved the interpretation of the Bombay Sales Tax Act, 1959 regarding the eligibility of certain goods for deduction under entry 6 of Schedule C and the validity of a recognition certificate issued to a registered dealer.

Issue 1: Eligibility of goods for deduction under entry 6 of Schedule C
The case revolved around whether printer wrappers sold by the applicants could be considered as 'paper adapted for use in packing goods' under entry 6 of Schedule C to the Bombay Sales Tax Act. The Sales Tax Officer disallowed a deduction claimed by the applicants for the sale of packing labels, asserting that the goods fell under entry 6 of Schedule C and could not be sold against form 15. The Tribunal upheld this decision, stating that the goods were covered by entry 6 of Schedule C, thereby prohibiting their sale against a recognition certificate.

Issue 2: Validity of recognition certificate and authority of Sales Tax Officer
The judgment also addressed the validity of the recognition certificate held by Parle Products, a registered dealer, which included packing labels in the list of recognized items. The Sales Tax Officer, assessing the applicants, questioned the inclusion of packing labels in the recognition certificate. The Court examined the authority of the Sales Tax Officer to dispute items listed in a recognition certificate granted by the Commissioner or delegated authority, emphasizing the binding nature of such certificates once issued.

The Court referred to a Supreme Court decision highlighting the importance of objective satisfaction in issuing recognition certificates and the limitations on challenging such certificates in subsequent tax assessments. It emphasized that once a recognition certificate is granted, third-party assessors cannot dispute the inclusion of specific items in the certificate, as this would undermine the certificate's binding value and lead to inconsistencies in assessments.

The judgment concluded by rejecting the contentions raised against the recognition certificate and the nature of the goods sold, answering the second question in the negative. The Court deemed it unnecessary to address the first question in light of its findings on the second issue. The respondent was directed to pay the costs of the reference to the applicants.