1985 (12) TMI 357 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to provisional assessment under Kerala General Sales Tax Act, 1963 for tapioca transactions in July and August 1977 based on being not the last purchaser and not liable to tax. Interpretation of sub-rule (14) of rule 32 regarding mandatory or directory nature. Appellant's contention of proving not being the last purchaser with other evidence despite not furnishing form No. 25. Analysis of tax liability under section 5 for dealers. Examination of hardship and inconvenience on dealers in complying with sub-rule (14) of rule 32. Determination of whether sub-rule (14) is mandatory or directory based on statutory object and tax evasion prevention.

Detailed Analysis:

The appellant, a registered dealer under the Kerala General Sales Tax Act, challenged the provisional assessment for tapioca transactions in July and August 1977, asserting not being the last purchaser and therefore not liable to tax. The dispute centered around the requirement of form No. 25 under sub-rule (14) of rule 32, which the appellant failed to furnish. The appellant argued that despite this, he should be allowed to prove he is not the last purchaser with other evidence. The single Judge dismissed the petition deeming sub-rule (14) as mandatory, precluding the appellant from providing alternate evidence. The appeal contested this decision, with the Government Pleader arguing that even if sub-rule (14) is not mandatory, the appellant's failure to present satisfactory evidence renders the petition invalid.

In assessing the nature of sub-rule (14) of rule 32, the court considered the charging section under section 5, which outlines tax liability for dealers based on turnover. Tapioca falls under the First Schedule, with tax levied at the point of last purchase in the State for liable dealers. The court highlighted the obligation of dealers to obtain and submit form No. 25 declarations to the assessing authority by the specified deadline. The appellant's counsel contended that the provision should be construed as directory due to the perceived burden on dealers, emphasizing the need for evidence to prevent tax evasion.

The court examined the statutory objective of sub-rule (14) to prevent tax evasion and ensure accurate information availability for assessing authorities. Emphasizing the importance of declarations to avert fabrication of evidence, the court concluded that sub-rule (14) must be construed as mandatory, aligning with the single Judge's decision. On the merits, the court noted the appellant's failure to provide evidence supporting not being the last purchaser, thereby dismissing the appeal. Ultimately, the court upheld the single Judge's ruling, emphasizing the mandatory nature of sub-rule (14) and the importance of preventing tax evasion.