1978 (9) TMI 159 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the Commercial Tax Officer's disallowance of deductions based on declaration forms.
2. Whether the provisions relating to declaration forms under section 5(2)(a)(ii) read with rule 27A are mandatory or directory.
3. The implications of defects in the declaration forms.
4. The impact of subsequent cancellation of purchasing dealers' registration certificates on the validity of declaration forms.
5. The relevance of the mode of payment and the absence of purchase orders in assessing the genuineness of transactions.
6. The appropriateness of the writ petition despite the availability of alternative remedies.

Detailed Analysis:

1. Validity of the Commercial Tax Officer's Disallowance of Deductions:
The Commercial Tax Officer disallowed deductions from the respondent's gross turnover for the four quarters ending 31st December 1967 and 1968, citing defects in the declaration forms. The respondent challenged these decisions, leading to the High Court's intervention.

2. Mandatory vs. Directory Nature of Provisions:
The court examined whether the provisions of section 5(2)(a)(ii) read with rule 27A regarding declaration forms are mandatory or directory. It referred to previous judgments, including Durga Sree Stores v. Board of Revenue, West Bengal and Shri Anil Kumar Dutta v. Additional Member, Board of Revenue, West Bengal, which held that substantial compliance with the provisions is sufficient. The court upheld this view, stating that not every omission or defect in a declaration form would invalidate it.

3. Implications of Defects in Declaration Forms:
The court noted that the Commercial Tax Officer had rejected declaration forms based on minor defects such as the non-striking out of alternatives. Referring to Durga Sree Stores, the court held that such minor defects do not invalidate the forms, emphasizing substantial compliance over strict adherence.

4. Impact of Subsequent Cancellation of Registration Certificates:
The court addressed the issue of declaration forms from purchasing dealers whose registration certificates were later canceled. It cited Shri Anil Kumar Dutta, which established that cancellation of registration after the transaction does not affect the validity of the declaration forms. The court found that the Commercial Tax Officer erred in rejecting forms on this ground.

5. Relevance of Mode of Payment and Absence of Purchase Orders:
The Commercial Tax Officer had also questioned the mode of payment (partly in cash and partly by cheque) and the absence of purchase orders. The court found these grounds irrelevant unless they directly impacted the genuineness of the transactions. The court emphasized that the revenue authorities failed to categorically determine whether the transactions were genuine.

6. Appropriateness of the Writ Petition:
The appellants argued that the respondent should have pursued alternative remedies. However, the court noted that this issue was not raised in the trial court, and both parties had argued on merits. Citing L. Hirday Narain v. Income-tax Officer, Bareilly, the court held that the writ petition was appropriately entertained and decided on merits.

Conclusion:
The court dismissed the appeal, upholding the decision to quash the impugned assessment orders for the periods ending 31st December 1967 and 1968. It clarified that the Commercial Tax Officer could make fresh assessments if not otherwise barred, considering the deductions claimed by the registered dealer in accordance with the law. The appeal was dismissed without any order as to costs, and the security furnished was ordered to be returned after three months.