1995 (3) TMI 429 - AT - VAT and Sales Tax

Summary

Issues:
1. Interpretation of rules regarding the mandatory production of declaration forms for claiming tax deduction.
2. Constitutionality of the requirement of producing declaration forms.

Issue 1: Interpretation of rules regarding the mandatory production of declaration forms for claiming tax deduction.

The case involved an application under section 8 of the West Bengal Taxation Tribunal Act, 1987, challenging an assessment order for the period ending June 30, 1984. The applicant, a partnership firm dealing in iron and steel goods, claimed a deduction under section 5(2)(a)(va) of the Bengal Finance (Sales Tax) Act, 1941, for sales to registered dealers. The assessing authority fixed the taxable turnover, and the applicant appealed, seeking deduction for sales to registered dealers without the necessary declaration forms. The Tribunal had to determine whether the production of declaration forms was mandatory for claiming the deduction.

The applicant argued that compliance with rule 27A(1) and 27A(1a) of the 41 Rules, including the production of declaration forms, should be considered directory, not mandatory, as the forms were unobtainable due to the unavailability of purchasing dealers. The respondents contended that the production of declaration forms was mandatory for claiming deductions, citing legal precedents supporting this view.

The Tribunal considered various legal precedents, including the Supreme Court's decision in Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer, which emphasized the strict compliance with the requirement of furnishing declaration forms to claim exemptions. The Tribunal also referred to a decision where the provision requiring a declaration form was held to be directory in a specific context. However, the Tribunal ultimately held that the production of declaration forms was mandatory for claiming deductions under the 41 Act and the 41 Rules.

Issue 2: Constitutionality of the requirement of producing declaration forms.

The applicant contended that if the production of declaration forms was held to be mandatory, it would infringe various articles of the Indian Constitution, affecting the right to carry on business. They argued that the requirement was unreasonable and discriminatory, especially considering the practical difficulties in obtaining declaration forms in bulk transactions.

The respondents, on the other hand, argued that the mandatory production of declaration forms was a legal requirement, and failure to comply would result in the claims being disallowed. They cited legal precedents supporting the mandatory nature of the requirement.

The Tribunal rejected the applicant's argument regarding the constitutionality of the requirement. It held that the provision for the production of declaration forms was not unreasonable or discriminatory. The Tribunal emphasized that the failure to produce the required forms would lead to the consequences of claim disallowance, as upheld by legal precedents.

In conclusion, the Tribunal dismissed the application, upholding the assessment modified by the appellate order. The Tribunal found no merit in the challenge to the constitutionality of the requirement for producing declaration forms and ordered the applicant to comply with the tax liabilities as determined.