1975 (10) TMI 93 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Reopening of assessment under Section 19(1) of the M.P. General Sales Tax Act.
2. Entitlement to concessional tax rate under Section 8(1) of the Act.
3. Requirement for goods to be specified in the registration certificate of the purchasing dealer.
4. Compliance with Rule 20(4) of the M.P. General Sales Tax Rules, 1959.

Detailed Analysis:

1. Reopening of Assessment under Section 19(1) of the M.P. General Sales Tax Act:
The assessment of the assessee for the period from 28th October 1962 to 17th October 1963 was reopened under Section 19(1) of the M.P. General Sales Tax Act, 1958, due to under-assessment. An additional demand of Rs. 1,191.56 was raised against the dealer by an order dated 29th April 1967. It was found that the dealer had sold tendu patti worth Rs. 26,038.90 to a purchasing dealer whose registration certificate did not mention tendu leaves as raw material during the period under assessment. Consequently, the tax rate was corrected from 1% to 5%, resulting in an additional demand of Rs. 1,041.56.

2. Entitlement to Concessional Tax Rate under Section 8(1) of the Act:
The dealer appealed against the order, arguing that they were not required to verify the registration certificates of purchasing dealers who provided declaration certificates in form XII-A. The Deputy Commissioner of Sales Tax rejected this objection. However, the Board of Revenue accepted the dealer's argument, relying on the precedent set in Commissioner of Sales Tax, M.P. v. Samaj Paper Mart, Indore, which emphasized that the selling dealer is not required to verify the correctness of the purchasing dealer's declaration.

3. Requirement for Goods to be Specified in the Registration Certificate of the Purchasing Dealer:
The core issue was whether the selling dealer could claim a concessional tax rate if the goods sold were not specified in the purchasing dealer's registration certificate, despite the purchasing dealer providing a declaration in form XII-A. The Supreme Court's observations in State of Madras v. Radio and Electricals Ltd. clarified that the selling dealer must ensure that the goods purchased are specified in the purchasing dealer's registration certificate. The selling dealer's duty extends to verifying this fact, and they cannot merely rely on the declaration provided by the purchasing dealer.

4. Compliance with Rule 20(4) of the M.P. General Sales Tax Rules, 1959:
Section 8(1) of the Act allows a concessional tax rate subject to compliance with prescribed restrictions and conditions. Rule 20(4) stipulates that the concessional rate is applicable only if the raw materials are specified in the purchasing dealer's registration certificate and a declaration in form XII-A is provided. The judgment emphasized that the selling dealer must comply with these provisions to claim the concessional rate. The selling dealer cannot claim the benefit based solely on the declaration if the goods are not mentioned in the purchasing dealer's registration certificate.

Conclusion:
The Court answered the reference by stating that the assessee, who obtained a declaration in form XII-A from the purchasing dealer, was not entitled to claim the concessional rate of tax under Section 8(1) of the Act because the goods were not specified in the registration certificate of the purchasing dealer. The Tribunal was directed to dispose of the case in light of this judgment, and each party was ordered to bear their own costs.

Reference Answered Accordingly.