1964 (8) TMI 49 - SC - VAT and Sales Tax

Whether the registered dealers in Punjab who gave C Forms to the assessee had complied with the rule in force in Punjab framed by the Punjab State Government? Held that - Appeal allowed. The Punjab purchasing dealers need only comply with the Punjab rules in the matter of supply of C Forms to the selling dealer, in Madras State, and rule 10(1) framed by the Madras State will not apply to them. The order of the Tribunal is not right and that the assessee is entitled to the lower rate of assessment, because he has furnished declaration in C Form as required under the Act and the rules. The revision is allowed. There will be no order as to costs.

Summary

Issues:
Interpretation of rule 10(1) of the Madras State rules under the Central Sales Tax Act regarding the requirement of a separate C Form for each sale transaction.
Applicability of rule 10(1) to purchasing dealers in Punjab and other states.
Obligation of a selling dealer to furnish as many C Forms as there are sales.
Denial of the benefit of lower rate of assessment based on compliance with rule 10(1).
Analysis:
The judgment of the Supreme Court dealt with the interpretation of rule 10(1) of the Madras State rules under the Central Sales Tax Act, which mandates that "no single declaration shall cover more than one transaction of sale." The case involved an assessee, a registered dealer in wool, who was denied the benefit of a lower rate of assessment on sales to registered purchasing dealers in Punjab due to non-compliance with the C Forms supplied by the purchasing dealers. The issue arose as the Punjab purchasing dealers had included all purchases in one C Form, contrary to the Madras rule requiring separate forms for each sale transaction.

The Court analyzed the provisions of the Central Sales Tax Act related to C Forms, emphasizing the requirement for dealers engaged in inter-State trade to furnish declarations in prescribed forms. The Court highlighted the distinction between the rules applicable to purchasing dealers in different states, noting that the Madras rule 10(1) only applies to dealers within the Madras State. It was established that the Madras State cannot legislate for purchasing dealers in Punjab or other states, who must adhere to rules framed by their respective states.

Regarding the obligation of a selling dealer to furnish C Forms, the Court examined rule 10(2) and concluded that there was no provision requiring the selling dealer to submit separate forms for each sale transaction. The Court rejected the argument that the selling dealer should comply with Madras rules even if the purchasing dealers in Punjab followed their state rules. It was emphasized that the selling dealer cannot compel purchasing dealers from other states to conform to Madras rules.

The Court also considered the rationale behind the requirement for separate C Forms for each sale transaction, finding no specific reason for such a mandate. The Court observed that consolidating purchases in one form could promote efficiency and economy of stationery. Additionally, the Court noted that rule 10(1) itself allows for a single C Form when sales do not exceed a certain threshold, indicating flexibility in compliance.

Ultimately, the Court held that the assessee was entitled to the lower rate of assessment as they had furnished declarations in C Forms as required by the Act and rules. The Tribunal's decision denying the benefit of the lower rate of assessment based on rule 10(1) compliance was deemed incorrect, and the revision was allowed in favor of the assessee.