1985 (12) TMI 353 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of second proviso to section 2(s) of the Rajasthan Sales Tax Act regarding turnover of gum not resold within the State.
2. Remedies available to the department for incorrect use of form S.T. 17.
3. Justification of the Board of Revenue's decision that no tax was payable by the dealer under section 5A of the Rajasthan Sales Tax Act.

Analysis:

Issue 1:
The case involved the interpretation of the second proviso to section 2(s) of the Rajasthan Sales Tax Act regarding the turnover of gum not resold within the State. The dealer-assessee had purchased gum with the intention of resale within the State but later sold it in inter-State trade. The Board of Revenue held that the goods were not taxable under sections 5 or 5A of the Act as they were sold in the course of inter-State trade. However, the Court found that the dealer should not have repurchased the gum against the declaration form S.T. 17 if it was intended for inter-State trade, as per rule 15 of the Rules. The Court concluded that the turnover of gum was not resold within the State as declared in form S.T. 17, and therefore, the tax liability applied.

Issue 2:
Regarding the remedies available to the department for incorrect use of form S.T. 17, the Court clarified that while penalty could be imposed under section 16(1)(k) for failing to use goods for the declared purposes, it was not the only remedy available. The department could also add the turnover of the goods in question to the taxable turnover. The Court disagreed with the notion that the only course of action was to proceed under section 16(1)(k) and emphasized that imposing penalty was not the sole remedy.

Issue 3:
The Board of Revenue had held that no tax was payable by the dealer under section 5A of the Rajasthan Sales Tax Act. However, the Court disagreed with this finding while addressing Issue 1. The Court's analysis of the relevant provisions and rules led to the conclusion that tax liability existed due to the incorrect declaration made in form S.T. 17. Therefore, the Court answered Question 3 in the negative, favoring the department and rejecting the Board's justification for no tax liability under section 5A.

In conclusion, the Court's detailed analysis of the provisions, rules, and circumstances of the case led to a decision in favor of the department regarding the tax liability of the dealer-assessee and the available remedies for incorrect declarations. The judgment clarified the application of the law in the context of the specific facts of the case, ensuring compliance with the Rajasthan Sales Tax Act.