1980 (4) TMI 292 - HC - VAT and Sales Tax

Summary

Issues:
Whether the assessee is liable to pay sales tax on declared goods purchased from a registered dealer without furnishing the required declarations in the prescribed form.

Analysis:
The case involved a reference under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, regarding the liability of the assessee to pay sales tax on iron scrap purchased from a registered dealer without furnishing the necessary declarations. The assessee argued that since the registered dealer was liable to pay tax, it should not be liable to pay tax on subsequent sales to consumers. However, the court pointed out that the definition of "taxable turnover" in the State Act allows deductions for sales to registered dealers for resale or inter-State trade, which did not apply to the assessee's case. The court referred to the Supreme Court's decision in Bhawani Cotton Mills Ltd. v. State of Punjab, emphasizing that tax on declared goods in Madhya Pradesh is leviable at the stage of purchase by a consumer or manufacturer. The court held that the assessee's failure to provide the necessary declaration to the selling dealer and paying tax as part of the price was its own fault, making the subsequent sales taxable under the State Act.

The court further cited the Supreme Court's decision in Rattan Lal & Co. v. Assessing Authority, stating that the law does not consider the actions of negligent or mistaken individuals, only those who act correctly according to the law. The court concluded that the assessee's sales to consumers were taxable under the State Act and not protected by the provisions of section 15 of the Central Sales Tax Act. Therefore, the court answered the reference by stating that the assessee is liable to pay sales tax on declared goods purchased from a registered dealer without furnishing the required declarations in the prescribed form. No costs were awarded in this reference.

In summary, the judgment clarified that the assessee's failure to provide the necessary declaration to the registered dealer from whom it purchased the goods, and paying tax as part of the price, resulted in the subsequent sales being taxable under the State Act. The court emphasized that negligence or mistakes on the part of the assessee do not absolve it from tax liability, as the law only considers actions in accordance with legal requirements.