1978 (5) TMI 106 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the provisions of the Central Sales Tax (U.P.) Rules, specifically rule 8-B(4), are mandatory or directory?
2. Whether the Additional Revising Authority erred in law by granting exemption to the assessee?

Analysis:
The judgment by the High Court of Allahabad involved a case where the assessee, a registered dealer, claimed exemption from sales tax on a turnover of Rs. 20,000 due to resale. The issue arose as the assessee failed to furnish the required C form. The Judge (Revisions), Sales Tax, initially held that rule 8-B(4)(ii) of the Central Sales Tax (U.P.) Rules was not mandatory but directory. This allowed the dealer to provide alternative evidence to prove the sale to a registered dealer. The assessee explained that the C forms were lost in transit after being sent by Victoria Mills, Kanpur. The Judge (Revisions), Sales Tax, accepted this explanation, stating that the assessee had made reasonable efforts to prove the sale and hence granted exemption on the turnover of Rs. 20,000.

The revising authority, at the instance of the Commissioner, referred two questions to the High Court for opinion. The first question was whether the provisions of rule 8-B(4) were mandatory or directory. The Court analyzed the language of sub-rule (4)(ii) which explicitly stated that no exemption shall be granted if the declaration form C was not furnished. The Court concluded that the requirement to furnish declaration form C was mandatory, leaving no discretion with the assessee or the assessing authority. The proviso allowed some flexibility for furnishing certificate forms E-I or E-II but not for declaration form C. Consequently, the Court held that failure to furnish declaration form C meant the dealer was not entitled to claim exemption.

In conclusion, the High Court answered both questions in favor of the department and against the assessee, affirming that the provisions of rule 8-B(4) of the Central Sales Tax (U.P.) Rules were mandatory. The Commissioner was awarded costs amounting to Rs. 200.