1991 (3) TMI 372 - HC - VAT and Sales Tax

Summary

Issues:
1. Limitation period for imposing penalty under section 10A of the Central Sales Tax Act, 1956.
2. Jurisdiction of Sales Tax Officer to impose penalty after initiation and withdrawal of revision proceedings.
3. Breach of declarations in form C by using goods for job work for other parties.
4. Presence of reasonable cause for penalty imposition under section 10(d) of the Central Sales Tax Act, 1956.

Analysis:

The Gujarat Sales Tax Tribunal referred four questions to the Gujarat High Court for decision. The first issue was whether the penalty imposed by the Sales Tax Officer under section 10A of the Central Sales Tax Act, 1956, for contravention in 1973 was time-barred. The second issue was the jurisdiction of the Sales Tax Officer to impose the penalty after the Assistant Commissioner initiated and withdrew revision proceedings. The third issue involved the breach of declarations in form C by using goods for job work for other parties. The fourth issue was the presence of reasonable cause for penalty imposition under section 10(d) of the Central Sales Tax Act, 1956.

During the assessment year 1973, the assessee purchased hexine oil for the solvent extraction process and used a portion for job work for customers. The Sales Tax Officer imposed a penalty for breach of declarations in form C. The Assistant Commissioner reduced the penalty on appeal, and the assessee further appealed to the Tribunal. The Tribunal rejected the contentions raised by the assessee and dismissed the appeal, prompting the assessee to seek reference to the High Court.

The High Court considered the Supreme Court's decision in Assessing Authority-cum-Excise and Taxation Officer v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239, which clarified the interpretation of section 8(3)(b) of the Central Sales Tax Act. The Supreme Court's ruling established that using goods purchased against declarations in form C for job work for third parties did not constitute a breach as long as the goods were intended for sale by those third parties. Consequently, the High Court held that the assessee had not breached the declarations in form C.

In conclusion, the High Court answered question No. 3 in favor of the assessee, thereby rendering the need to address questions 1, 2, and 4 unnecessary. The Court ruled in favor of the assessee and against the department, with no order as to costs in the reference.