1983 (12) TMI 267 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the exemption certificate without proper cancellation.
2. Directory nature of the 30-day period prescribed under rule 12 for filing renewal applications.

Issue-wise Detailed Analysis:

1. Validity of the Exemption Certificate Without Proper Cancellation:
The primary question was whether the assessing authority was justified in treating the exemption certificate as invalid even when it was not properly cancelled. The court examined the procedural requirements under the Rajasthan Sales Tax Rules, particularly focusing on rules 8, 9, 10, 12, and 14. According to rule 8, a valid certificate of exemption was necessary for claiming tax exemption. Rule 12 required the exemption certificate to be renewed within 30 days, but the court found this to be regulatory rather than mandatory.

The court held that the exemption certificate granted by the Sales Tax Officer on 3rd June, 1957, was not void despite being issued on an application filed beyond the prescribed 30-day period. The certificate was not cancelled or set aside by any competent authority, and thus, it retained its validity. The court emphasized that the assessing authority could not ignore the exemption certificate on procedural grounds unless it was lawfully cancelled or set aside. The court concluded that the assessing authority was not justified in treating the exemption certificate as invalid, answering the first question in the negative and against the revenue.

2. Directory Nature of the 30-Day Period Prescribed Under Rule 12 for Filing Renewal Applications:
The second issue was whether the 30-day period prescribed under rule 12 for filing renewal applications was directory and whether the assessing authority could ignore the renewal due to a delay in submission. The court analyzed the nature of the 30-day requirement and concluded that it was intended to regulate the process rather than impose a strict deadline. The court noted that the rule-making authority later amended rule 12 to allow for penalties and condonation of delays, further supporting the directory nature of the provision.

The court observed that the exemption certificate, once granted, could not be ignored by the assessing authority even if the application was filed late. The exemption certificate was effective from the commencement of the financial year, provided the renewal fee was paid within 30 days. The court found that the Board of Revenue erred in its interpretation that an exemption certificate could not be effective retrospectively. The court concluded that the 30-day period was directory, and the assessing authority was not justified in imposing tax on the turnover for the period from 1st April, 1957, to 5th May, 1957. The second question was answered accordingly.

Conclusion:
The court answered both questions in favor of the assessee. The assessing authority was not justified in treating the exemption certificate as invalid without proper cancellation, and the 30-day period for filing renewal applications was directory. Consequently, the turnover of the assessee relating to the sale of allopathic medicines during the period from 1st April, 1957, to 5th May, 1957, could not be taxed, and the imposition of tax was set aside.