2010 (9) TMI 957 - HC - VAT and Sales Tax

Whether the inference drawn by the Tribunal that the appellant was in possession of the books of account and therefore there is no reason for them not to produce them before the assessing authority is not contrary to the facts of the case especially when an FIR regarding the loss of books of account had been lodged on September 9 2001 and the remanded assessment order in this matter was passed on January 13 2005 (and not February 25 2000)? Whether when the goods dealt in by the appellant were first point goods on which liability to tax is on first sale then could the liability be fastened on the appellant? Held that - Keeping in view the ratio of the Supreme Court judgment in India Agencies (Regd.) Bangalore 2004 (12) TMI 372 - SUPREME COURT OF INDIA there has to be strict compliance by the dealer in order to avail of the benefit under these provisions. Rule 9 of the Delhi Sales Tax Rules requires the dealer to produce a declaration in form ST-3 duly filled in and signed by the dealer selling the goods. This would clearly signify that form ST-3 has to be produced in original. No doubt when these original forms ST-3 are lost or destroyed because of the circumstances beyond the control of the assessee he should not be punished and denied the benefit. The rule-making authority has taken care of such a situation so that no unnecessary hardship is caused. Sub-rule (3) is specifically added to take care of these circumstances. Sub-rule (3) is an exception and if the circumstances contained therein exist the Commissioner can exempt a dealer from furnishing original ST-3 from. However for doing so the conditions laid down therein are to be satisfied which are specifically incorporated in the provision. To avail of the benefit the dealer has to necessarily seek exemption in the manner provided therein. Appeal dismissed.

Summary

Issues Involved:
1. Whether the Tribunal's inference that the appellant was in possession of the books of account is contrary to the facts of the case.
2. Whether the appellant could be held liable for sales tax on first point goods, given that they were not the first seller and had produced photocopies of purchase invoices.

Detailed Analysis:

Issue 1: Tribunal's Inference on Books of Account
The appellant contended that the Tribunal's inference that the appellant was in possession of the books of account was incorrect, especially since an FIR about the loss of books had been lodged on September 9, 2001, and the remanded assessment order was passed on January 13, 2005. The Tribunal's conclusion was based on the judgment in *India Agencies (Regd.), Bangalore v. Additional Commissioner of Commercial Taxes, Bangalore [2005] 139 STC 329*. The Supreme Court in this case emphasized strict compliance with the provision requiring original documents to claim tax benefits. The appellant failed to apply for exemption under sub-rule (3) of rule 7 of the Delhi Sales Tax Rules, which allows for exemption if original documents are lost due to circumstances beyond control. The appellant did not make such an application, thus failing to meet the conditions laid down in the rule.

Issue 2: Liability for Sales Tax on First Point Goods
The appellant argued that the goods dealt with attracted sales tax on the first sale, and since the first sale was by registered dealers to the appellant, the liability to pay sales tax did not fall on them. The appellant produced photocopies of the purchase invoices as the original books were purportedly lost. The Tribunal, however, required strict compliance with the provision to produce original ST-3 forms to claim exemption. The appellant did not seek exemption from filing original forms as required under sub-rule (3) of rule 7 of the Delhi Sales Tax Rules. The court reiterated that strict interpretation of the provisions is necessary to avoid misuse, and without original forms, the appellant could not demonstrate that the sales tax had been paid at the first point.

Conclusion:
The court dismissed the appeal, emphasizing the need for strict compliance with the statutory provisions to claim tax benefits. The appellant's failure to apply for exemption under the specific rule for lost documents and reliance on photocopies did not meet the legal requirements. The appeal was dismissed with no order as to costs.