1981 (2) TMI 204 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the notice issued under section 37 of the Bombay Sales Tax Act.
2. Whether the respondents acquired immunity from forfeiture due to a defective notice.
3. Interpretation of section 46(2) of the Bombay Sales Tax Act.
4. Application of procedural law in the context of amended notice forms.

Issue-wise Detailed Analysis:

1. Validity of the notice issued under section 37 of the Bombay Sales Tax Act:
The respondents were not registered as dealers under the Bombay Sales Tax Act, 1959, during the relevant period but were registered under the Central Sales Tax Act, 1956. They collected Rs. 2,005.91 as tax on their sales, which the Sales Tax Officer deemed a contravention of section 46(2) of the Bombay Sales Tax Act, 1959. Consequently, this amount was forfeited under section 37. Initially, the notice issued was in the old form 29, which was handwritten and did not properly state the grounds for forfeiture. This form was later amended on 9th August 1969, and a new notice was issued in the amended form.

2. Whether the respondents acquired immunity from forfeiture due to a defective notice:
The Tribunal initially set aside the Sales Tax Officer's order, reasoning that the old form 29 was defective and did not set out all grounds for forfeiture as required by section 37. The Tribunal held that the respondents had acquired immunity from forfeiture due to this defect. However, the High Court rejected this argument, stating that the respondents' submission was based on a false premise. The court clarified that the prohibition against tax collection by unregistered dealers was clear under section 46(2), and the procedural defect in the notice did not grant substantive immunity.

3. Interpretation of section 46(2) of the Bombay Sales Tax Act:
Section 46(2) prohibits any person who is not a registered dealer and liable to pay tax from collecting tax on the sale of goods. The High Court referenced the case of Ramkrishan Kulwantrai v. Commissioner of Sales Tax [1979] 44 S.T.C. 117, which elucidated that section 46(2) contains three prohibitions, including the prohibition against unregistered dealers collecting tax. The respondents violated this prohibition by collecting tax without being registered dealers. The court emphasized that both conditions of being a registered dealer and being liable to pay tax must be fulfilled to collect tax.

4. Application of procedural law in the context of amended notice forms:
The High Court explained that section 37(2) and (3) prescribe the procedure for levying penalties or ordering forfeiture, which includes serving a notice in the prescribed form. The old form 29 was defective as it did not include all grounds for forfeiture. However, the court held that procedural laws are retrospective, and the amended form 29 could be used to issue a fresh notice. The court cited Maxwell on the Interpretation of Statutes and relevant case law to support the principle that procedural changes apply retrospectively unless stated otherwise.

Conclusion:
The High Court concluded that the respondents did not have substantive immunity from forfeiture due to the defective notice. The amended form 29 could be used to issue a valid notice for forfeiture. The question referred to the court was answered in the affirmative, in favor of the department and against the respondents. The respondents were ordered to pay the costs of the reference fixed at Rs. 300.

Reference answered in the affirmative.

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