1985 (3) TMI 242 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to orders of Sales Tax Officer and Divisional Deputy Commissioner of Sales Tax.
2. Rejection of application under section 16 of the M.P. General Sales Tax Act.
3. Seizure of account books and documents during raids at business premises.
4. Assessment of sales tax on chironji and other items.
5. Imposition of penalty under section 17(3) of the M.P. General Sales Tax Act.
6. Dispute regarding tax liability on chironji transactions.
7. Acceptance of part of the explanation for mahua and amchur transactions.
8. Question of penalty imposition if tax is not leviable.

Analysis:
The petitioner challenged the orders of the Sales Tax Officer and Divisional Deputy Commissioner of Sales Tax, contending that he is a proprietary concern dealing in minor forest produce and medicines. The Sales Tax Officer rejected the petitioner's application under section 16 of the M.P. General Sales Tax Act for dealing in forest produce at Rajgarh. The petitioner had taken a lease of Government Forest for collecting chironji, and during a raid, account books were seized covering transactions related to chironji, mahua, and amchur. The Sales Tax Officer assessed sales tax on chironji transactions and imposed a penalty under section 17(3) of the Act. The Divisional Deputy Commissioner upheld the decision, leading to the petitioner filing the present petition.

The petitioner argued that chironji collected from the forest department was tax-paid goods, and thus, he was not liable to pay sales tax on subsequent sales. The authorities contended that there was no evidence to prove the origin of the chironji. However, it was acknowledged that if the chironji was sourced from the forest department, it should be considered tax-paid goods. The Court noted that the petitioner had purchased all chironji under a contract and sold it using transit passes, emphasizing that since the forest department paid sales tax on the chironji, it should not be added to the taxable turnover of the petitioner.

Regarding mahua and amchur transactions, the petitioner argued that part of the explanation was accepted, while the authorities contended otherwise. The Court held that authorities have the discretion to accept or reject explanations, and if part of the explanation was accepted, it was not a valid ground for a writ petition. Ultimately, the Court quashed the previous orders, directing the Sales Tax Officer to reassess the tax liability excluding chironji transactions and to determine any penalty accordingly. The parties were instructed to bear their own costs, and the security amount was to be refunded to the petitioner.