1982 (6) TMI 241 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the effect of a stay order on sales tax liability.
2. Consideration of the validity of deductions claimed under the Punjab General Sales Tax Act, 1948.

Detailed Analysis:

1. The first issue pertains to the interpretation of the effect of a stay order on sales tax liability concerning sales made to a company during the period of the stay order. The applicant, a registered dealer, claimed deductions for sales made to a company in Amritsar, which had a stay order from the High Court. The Deputy Excise and Taxation Commissioner sought to reopen the assessment based on the cancellation of the company's registration certificate. However, the High Court held that during the period of the stay order, the registration certificate of the company must be deemed valid, and sales tax liability cannot be imposed on the selling firm. The court emphasized that the purpose of a stay order is to maintain the status quo, and the selling firm cannot be expected to charge sales tax during this period. The court ruled in favor of the applicant, stating that the sales made during the stay order period are not subject to sales tax liability.

2. The second issue involves the validity of deductions claimed under the Punjab General Sales Tax Act, 1948. The court considered the fact that the cancellation of the registration certificate of the company in Amritsar was not notified in the official Gazette as required by the rules. Additionally, the company did not surrender the registration certificate to the Assessing Authority. Citing the case of Arjan Radio House v. Assessing Authority, the court held that if the cancellation of the registration certificate is not officially published, transactions with the company would not be subject to sales tax. Therefore, the court ruled in favor of the applicant, stating that the deductions claimed should have been allowed. The court found that the Sales Tax Tribunal was not justified in disallowing the deduction claimed by the applicant, and the parties were directed to bear their own costs.

In conclusion, the judgment addressed the issues of sales tax liability during a stay order period and the validity of deductions claimed under the Punjab General Sales Tax Act, ruling in favor of the applicant on both counts.