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TMI Blog2005 (1) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... us, the primary intendment of the Act is to levy and collect tax and every devise, including of stipulations pertaining to the dealer- friendly declaration forms are incorporated to implement the objective of the Act itself as pointed out by the High Court they cannot be conceived as ultra vires the statute - Civil Appeal No. 1717-1719 of 1999, 308, 313, 314, 315 of 2003, S.L.P. (Civil) No. 1954 of 2003, C.W.P. No. 3304, 3727, 3859 of 1997 - - - Dated:- 25-1-2005 - VARIAVA S.N., LAKSHMANAN AR. AND KAPADIA S.H. JJ. Advocates: Ravi P. Mehrotra, Mrs. Kiran Bhardwaj, H.C. Bhatia, Raj K. Batra, Mrs. Anil Katiyar and Mrs. Sushma Suri, Rajesh Mahna, Randhir Chawla, Ms. Renu Sahgal, Ms. Malvika Bhargava, Y.P. Mahajan, K.C. Dua and D.S. Mahra. for the parties. -------------------------------------------------- The judgment of the Court was delivered by Dr. AR. LAKSHMANAN, J. -The appellants in the above appeals, namely, C.A. Nos. 308, 313, 314 and 315 of 2003 and S.L.P. No. 1954 of 2003 are selling dealers. The respondents in Civil Appeal Nos. 1717- 1719 of 1999 are the purchasing dealers. This batch of appeals raises common question of law. The facts are essent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 1975. 6.. As already noted the appellants filed writ petitions in the High Court praying for an order or direction be issued quashing rule 8(4)(c) of the Delhi Sales Tax Rules, 1975 (hereinafter referred to as the rules ) on the ground that it is ultra vires the provision of section 4(2)(a)(v) of the Delhi Sales Tax Act, 1975 (hereinafter referred to as the Act ). 7.. The grievance of the appellants (selling dealers) pertains to the non-issuance of sales tax forms (ST-1). In the instant case, a legal question has arisen because the appellants as the selling dealers sold goods to the respondents-purchasing dealers on the latter's assurance that they will supply requisite ST-1 forms to the former. Instead it had transpired that the Sales Tax Department has declined to issue ST-1 forms to the purchasing dealers, in this batch of appeals either for the reason that they have relinquished their registration or because they have not complied with the provisions of the Act and the Rules. The consequence of the department's declining to issue ST-1 form is that the appellant (selling dealers) would become liable to deposit the sales tax in respect of transactions in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said rule undo the substantive law for which the Administrator has no authority. The rule 8(4)(c) overrides the provisions of the Act itself and undo the Act for the functioning for which the Rules have been framed. 12.. Learned counsel has also invited our attention to a similar case which came up before the Delhi High Court in the case of Shri Krishna Engg. Co. v. Commissioner of Sales Tax Delhi Reported in [2003] 131 STC 321. in C.W.P. No. 3304 of 1997, whereby the High Court held that the Rules which are meant for carrying out the provisions of the Act cannot take away what is conferred by the Act or whittle down its effect. It is to be noted that against the above judgment, the State has preferred Civil Appeals Nos. 1717-1719 of 1999. We shall deal with the correctness of the above judgment of the Delhi High Court while considering Civil Appeals Nos. 1717-1719 of 1999 in the later part of our judgment. 13.. Mr. Ravi P. Mehrotra, learned counsel for the Commis- sioner of Sales Tax while arguing the State's appeal in Civil Appeals Nos. 1717-1719 of 1999 and also replying to the arguments of counsel for the appellants in the other bunch of appeals made the following su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax [reported in [1997] 105 STC 36 (Delhi) delivered on November 8, 1996] [Y.K. Sabharwal, J. (as he then was) and D.K. Jain, J.]. In this case, the assessee had filed a revision petition and stay application against the assessment order which were pending. It was held that since the amount was in dispute and not admitted, therefore, it was directed that the forms be issued to the assessee. Therefore, a dealer to avoid payment of tax and at the same requiring the issuance of form ST-1, had to merely file a revision petition along with stay application and easily bypass the requirement of rule 8(4)(c)(ii). The law therefore did not provide for any mechanism to check this kind of evasion of tax, which was the purpose of rule 8(4)(c). (c) What is the remedy that the Act has provided. Rule 8(4)(c)(ii) was amended to provide that issuance of forms may be withheld if the applicant had defaulted in making the payment of the amount of tax assessed or the penalty imposed by the assessing authority in respect of which no orders for instalment/stay have been obtained from the competent authority under the provisions of law. (d) What is the reason of the remedy. The judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared tax-free under section 7; (iii) sale of goods not liable to tax under section 8; (iv) sale of goods which are proved to the satisfaction of the Commissioner to have been purchased within a period of twelve months prior to the date of registration of the dealer and subjected to tax under the Bengal Finance (Sales Tax) Act, 1941, as it was then in force, or under this Act; (v) sale to a registered dealer;......... Provided...... Provided.... . . (b)........ (ii)....... Rule 7. Condition subject to which a dealer may claim deduction from his turnover on account of sales to registered dealers. -(1) A dealer who wishes to deduct from his turnover the amount in respect of sales on the ground that he is entitled to make such deduction under the provisions of sub-clause (v) of clause (a) of sub-section (2) of section 4, shall produce: (a) copies of the relevant cash memos or bills according as the sales are cash sales or sales on credit; and (b) a declaration in form ST-1 duly filled in and signed by the purchasing dealer or a person authorised by him in writing: Provided....... Provided......... 18.. Rule 8 provides as to from whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld, for reasons to be recorded in writing, the issue of declaration forms to him and the appropriate assessing authority shall make a report to the Commissioner about such withholding within a period of three days from the date of its order: Provided that the appropriate assessing authority may, instead of withholding declaration forms, issue to the applicant, with the previous approval of the Assistant Commissioner appointed under sub-section (2) of section 9 of the Act, such forms in such numbers and subject to such conditions and restrictions as it may consider reasonable; Provided further that notwithstanding the provisions of any other rule, the issue of declaration forms to an applicant to whom a certificate of registration under the Act has been granted for the first time, shall be withheld by the appropriate assessing authority, until such time as all the returns for the return period commencing from the date of validity of this certificate of registration are furnished and tax due according to such returns is paid by him. (d) Where the appropriate assessing authority does not proceed under clause (a), clause (b), or clause (c), it shall issue the requisite n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sundry transactions mentioned in clause (a) thereof. None of the said transactions, however, postulate that all sales to registered dealers per se qualify as deductions. There are three provisos to section 4(2)(a) of the Act, the second proviso of which declares that no deduction in respect of any sale referred to in sub-clause (v) shall be allowed unless a true declaration in the prescribed form, duly filled and signed by a dealer, is furnished to the selling dealer. 22.. The preamble of the Delhi Sales Tax Act, 1975 reads as under: An Act to consolidate and amend the law relating to the levy of tax on sale of goods in the National Capital Territory of Delhi. 23.. The undisputed objective of the Act is to levy and collect tax on the sale of goods in the National Capital Territory of Delhi. Levy to tax is meaningless if the tax is not collected. It can never be the intention of the lawmakers to keep on levying tax without any effort to collect the tax so levied. This Court in Indo International Industries v. Commissioner of Sales Tax [1981] 47 STC 359 held that (p. 361): It is well-settled that in interpreting items in statutes like the Excise Tax Acts or Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Act. Significantly, although the nomenclature registered dealer has been used in the Act, this term has not been defined in section 2. However, it does not create any controversy in assuming it to mean any dealer who has been accorded registration under the Act. Section 2(e) defines turnover as the aggregate of the amounts of sale price receivable or actually received by any dealer in respect of any sale of goods. As in the case of the term registered dealer , the definition of taxable turnover is not contained in section 2 of the Act. For the meaning of taxable turnover , we must travel to section 4(2) of the Act which clarifies that for the purposes of the Act, taxable turnover means that part of a dealer's turnover which remains after deducting therefrom the sundry transactions mentioned in clause (a) thereof. None of these, however, postulates that all sales to registered dealers per se qualify as deductions. 31.. There are three provisos to section 4(2)(a) of the Act; the penultimate declares that no deduction in respect of any sale referred to in sub-clause (v) shall be allowed unless a true declaration in the prescribed form duly filled and signed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has adopted the following application form for issue of declaration in form ST-1. We are reproducing the application form hereinbelow: Application form for issue of declarations in forms ST-1. To The Assessing Authority, Ward No............. 1. Name and style of the business: 2. Full address: 3. Local R.C. No.: 4. No. of unutilised forms in hand: 5. No. of forms now required: 6. Return period quarterly/monthly: 7. The period/year up to which the assessment has been last made: 8. Whether all returns due till date since the last assessment have been furnished and the tax due according to them paid. If not, state the defaults and reasons therof. 9. Whether the amount of arrears of tax still remains payable. If so, state the year and the amount of arrears and reasons for non- payment. I do hereby solemnly affirm and declare that the above information is true and correct to the best of my knowledge and belief. Signature of the dealer. Status............. Please deliver........forms to Shri.....an employee of my firm. His signatures are as attested below: Signature of dealer Signature of Shri........ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 657 opined that, however great the hardship may appear to the judicial mind, In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substances of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed . A few years later another Constitution Bench in the case of Commissioner of Sales Tax v. Modi Sugar Mills Ltd.[1961] 12 STC 182 (SC). AIR 1961 SC 1047observed thus: In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of which is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency . 38.. It was urged by learned counsel for the appellant that dues are recoverable as arrears of land revenue; the department should proceed against the purchasing de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the payment of the amount of tax assessed or the penalty imposed by an appropriate assessing authority, which the applicant admits to be due from him and which is not in dispute. Substituted rule 8(4)(c)(ii): defaulted in making the payment of the amount of tax assessed or penalty imposed by the assessing authority, in respect of which no orders for instalments or stay have been obtained from the competent authority under the provisions of law. 40.. According to the purchasing dealers the amended rule is in excess of the rule-making power under section 71 of the Act. The division Bench allowed the writ petitions and held substituted rule 8(4)(c)(ii) ultra vires the rule-making power of the Lt. Governor of Delhi under section 71 of the Act. 41.. The reasoning by the division Bench is that the Act nowhere provides for withholding of the issuance of form in the eventuality of the applicant-dealer being a defaulter or in arrears of tax. A denial on the part of the sales tax authorities to issue the requisite declaration form takes away the substantive right conferred by the Act on the dealer for which Act itself does not provide. In the instant batch of Civil Appeals Nos. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the division Bench in Simran Engineering Works, etc. The reasoning given by the Bench in rejecting the challenge in regard to the vires of rule 8(4)(c) are very sound. As rightly pointed out by the division Bench, the sales tax department is neither privy to nor is it concerned with any assurances that might have been exchanged inter se between the selling and purchasing dealers in the matter of furnishing ST-1 forms. There is no reason for the consequences of the dealers acts of omission or commission to visit the department. The Act and the Rules do not prohibit the simultaneous furnishing of ST-1 forms, they, in fact, envisage it. Supply of ST-1 forms by the department under the Rules is an advance, however, the actual practice may be different (para 7 onwards of page 36 of the judgment). 44.. In our opinion, the generality of the provision of section 71(1) should be given its full effect so as to enable the making of Rules for the full implementation of any provisions of the Act. The impugned rule also gives effect to section 43(5) of the Act which deals with appeals and contains the requirement of pre-deposit of tax and penalty. Other situations where the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old that the Civil Appeals Nos. 308, 313, 314 and 315 of 2003 and S.L.P. No. 1954 of 2003 are without merit and are dismissed and the common judgment and order passed by the High Court in the writ petitions dated July 12, 2002 [2003] 131 STC 372 (Delhi) is confirmed. 48.. In view of the judgment now passed by this Court in Civil Appeal No. 314 of 2003 batch, we hold that the judgment and order passed by the High Court in C.W.P. No. 3304 of 1997 Shri Krishna Engineering Co.'s case [2003] 131 STC 321 (Delhi) is no longer good law. Consequently, Civil Appeals Nos. 1717-1719 of 1999 stands allowed. Other consequences will follow. Before parting with this case, we also place on record the statement made by Shri Ravi P. Mehrotra, learned counsel appearing for the Department that if a purchasing dealer applies for form ST-1 in advance he will be supplied with the forms within one week subject to the rules and regulations and if it is in order under the Act and Rules, the same shall be furnished by the department to the applicant not later than one week. 49.. However, in view of the understandable mis-construction by the parties to these appeals of the decision of Shri Krishna En ..... X X X X Extracts X X X X X X X X Extracts X X X X
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