1997 (12) TMI 606 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to revisional order dated May 26, 1986, regarding assessment of sales tax under the M.P. General Sales Tax Act, 1958 for a specific period. Dispute over deduction claimed by the petitioner under section 2(r)(iv) of the Act for sales made to M/s. N.A. Trading Company. Contention regarding benefit of deductions based on circular issued by the Commissioner of Sales Tax. Disagreement with assessing authority's decision due to the alleged fictitious nature of M/s. N.A. Trading Company. Appeal to Deputy Commissioner (Appeals) and subsequent rejection. Further revision under section 39(1) of the Act before the Additional Commissioner of Sales Tax. Challenge to the revisional order before the High Court.

Analysis:
The petitioner, a partnership-firm engaged in the business of grain, oil-seeds, and kirana, challenged a revisional order dated May 26, 1986, regarding sales tax assessment under the M.P. General Sales Tax Act, 1958. The petitioner claimed a deduction under section 2(r)(iv) of the Act for sales made to M/s. N.A. Trading Company. The petitioner relied on a circular by the Commissioner of Sales Tax regarding deductions for tax-paid goods sold to registered dealers. The assessing authority disputed the claim, alleging that M/s. N.A. Trading Company was fictitious and had its registration retrospectively cancelled. Despite appeals and revisions, the petitioner's claim was rejected by the appellate and revisional authorities. The High Court considered previous judgments, including one where it was held that cancellation of registration with retrospective effect does not deprive a dealer of benefits from tax-paid goods. The High Court quashed the impugned order and remanded the matter for fresh consideration in light of relevant authorities, emphasizing a fair hearing for the parties.

The High Court referred to judgments from its own division bench and the Bombay High Court, establishing the principle that retrospective cancellation of registration does not negate benefits accrued from sales. The court highlighted the importance of presenting relevant case law to the revisional authority for proper application to the facts at hand. Consequently, the High Court allowed the petition, setting aside the impugned order and directing a fresh hearing by the revisional authority. The parties were instructed to appear for the hearing within a specified timeframe, emphasizing a timely resolution of the matter. The High Court's decision focused on ensuring a fair and informed consideration of the petitioner's claim in accordance with legal principles and precedents.