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2020 (3) TMI 10 - HC - VAT and Sales TaxDisallowance of deductions under section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948 - deduction denied on the ground that the goods purchased from the petitioner were not mentioned in the registration certificate of the purchasing dealer - HELD THAT - From the provisions of Section 5(2)(a), it is evident that deduction is allowed of sales made to the registered dealer, of goods for resale or goods mentioned in registration certificate for use in manufacture of goods for sale. From the Clause 4 of form ST-IV, it is clear that only the goods which can be purchased for use in manufacture are mentioned, there is no list of goods intended to be re-sold - The deduction cannot be disallowed for non-specification of goods in the registration certificate where the dealer is registered for re-sale or is involved in trading also. The position would be different if the dealer is not registered for trading, in that case even non-scoring of purpose of purchase would be of no relevance as in such eventuality, only the goods specified in the certificate of registration can be purchased for use in manufacture. Application disposed off.
Issues:
Deductions under Section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948. Analysis: The judgment pertains to a reference under Section 22 of the Punjab General Sales Tax Act, 1948, regarding the entitlement to deductions under Section 5(2)(a)(ii) of the Act. The case involved an assessee engaged in trading of specific goods. The dispute arose when the deduction under Section 5(2)(a)(ii) was disallowed due to goods purchased not being mentioned in the registration certificate of the purchasing dealer. The revision filed before the Sales Tax Tribunal was dismissed, leading to the reference question. The relevant provisions of Section 5(2)(a)(ii) of the Act were analyzed in detail. This section defines the 'taxable turnover' and allows deductions from the gross turnover under specific circumstances. Rule 26 of the Punjab General Sales Tax Rules, 1949, along with form ST-IV and form ST-XXII, were also considered. These forms and rules outline the procedure for availing deductions and the necessary documentation required. The Court examined the purpose of the declaration form (ST-XXII) issued by the purchasing dealer to the selling dealer for claiming deductions. It was noted that the form specifies four purposes for which goods are intended to be purchased. The Court disagreed with the rejection of the claim based on non-specification of goods in the registration certificate, emphasizing that the deduction is allowed for sales made to registered dealers for resale or for use in the manufacture of goods. The Court highlighted that the registration certificate (form ST-IV) only mentions goods that can be purchased for use in manufacture, not for resale. Therefore, the deduction cannot be disallowed solely for non-specification of goods in the registration certificate, especially when the dealer is registered for resale or trading. The judgment clarified that the situation would differ if the dealer is not registered for trading, as only goods specified in the registration certificate can be purchased for manufacturing purposes. In conclusion, the Court answered the reference question in favor of the petitioner, emphasizing that the deduction under Section 5(2)(a)(ii) should not be disallowed based on non-specification of goods in the registration certificate, especially when the dealer is registered for resale or trading activities.
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