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TMI Blog1962 (4) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case, be deprived of the right to claim a set-off so long as the objective of the said rule could be satisfied; for it was possible to check from the records maintained by the opponents the amounts paid by way of general sales tax to registered dealers in respect of the purchases made by them between the 1st April, 1954, and 13th July, 1955, and it was held that they should be entitled to claim a set-off in respect of such general sales tax paid by them to such dealers. The Tribunal also unanimously held that the opponents were not liable to pay any penalty under the Bombay Sales Tax Act, 1953, and, accordingly, the penalty imposed thereunder was set aside. 2.. Mr. R.V. Patel for the opponents has raised a preliminary objection based on the language of sub-section (1) of section 34 of the Act of 1953. That sub-section reads as follows: "34. (1) Within ninety days from the passing by the Tribunal of any order under sub-section (2) of section 30 or sub-section (1) of section 31 affecting any liability of any person to pay the tax, such person or the Collector may by application in writing accompanied where the application is made by any person (other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of tax recovered from him or payable by him on any purchase of goods- (A) unless such dealer has maintained (i) for the purposes of sub-rules (1), (1-A), (2), (2-A), (2-AA), (2-B), (2-BB), (2-BC), and (2-C), a register in Form (10) of all purchases of goods, made by him, in which the particulars of each such purchase and the amount recovered from the dealer by way of tax have been entered in chronological order within ten days from the date of each such purchase and has furnished the Collector with a statement in Form (12) annexed to his return for the relevant period within the time prescribed for such return." Mr. Patel first contended that the set-off claimed was not a tax leviable under any of the said two sub-sections. He has next contended that though in making the assessment the assessing officer had to find whether any set-off was allowable, the assessment was the final determination of the amount which the assessee is required to pay, and that just as the penalty imposed, if any, is a part of the assessment order, although the penalty is not a tax, a set-off which is granted may also be a part of assessment order, although it is not a tax. He has referred to the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the general sales tax payable by a registered dealer in respect of any period, the Collector shall grant him a drawback, set-off or refund, as the case may be, for an..........." The general sales tax payable and the set-off which may be granted are thus linked together in the order of assessment and the effect of any set-off granted is to reduce pro tanto the general sales tax which would be payable otherwise. The set-off, therefore, can, in our opinion, certainly be regarded as within the scope of the language "affecting any liability of any person", etc. We think, therefore, that Mr. Patel's argument that no reference to the High Court lies in (1) [1958] 9 S.T.C. 780, at p. 789. this case is not tenable. We, accordingly, proceed to the subject-matter of this application. 3.. The following statement of facts is based on the statement of facts to be found in the present application. Statement of facts- (a) The opponents are dealers carrying on the business of selling and supplying cloth and other textile materials within the State of Bombay. During the assessment period from 1st April, 1954, to 13th July, 1955, their turnover exceeded the limit prescribed by section 5 of the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (4) of section 16. Thereafter the opponents preferred a revision application which was heard by the Additional Collector of Sales Tax, Central Division, Bombay. The opponents contended before the said authority that sub-rules (2) and (4) of rule 11 of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, were bad, being in direct conflict with section 18-B of the Act. (g) The Additional Collector of Sales Tax dismissed the revision application so far as the opponents' claim for a set-off under sub-rule (2) of rule 11 of the said rules was concerned. As regards the penalty levied under sub-section (7) of section 14, it was reduced to Rs. 750. (h) The opponents thereupon preferred a revision application to this Tribunal. By its majority judgment dated 3rd November, 1958, this Tribunal allowed the said application and set aside the order of the lower authorities, holding that since the offence of carrying on business without applying for a registration certificate had been compounded by the Assistant Collector, the opponents should be presumed, by reason of section 11(5) of the said Act, to have duly applied for registration and to have obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law to have obtained a registration certificate with effect from 1st April, 1954. (ii) Whether the provisions of section 11(5) of the Bombay Sales Tax Act, 1953 (have a retrospective effect so as to) confer upon the respondents all the rights and privileges of a registered dealer for the previous period in respect of which they had failed to apply for and obtain a registration certificate, as required by law. (iii) Whether this Tribunal erred in law in holding that by reason of section 11(5) of the Bombay Sales Tax Act, 1953, the registration certificate granted to the respondent (on the compounding of their offence of carrying on business without applying for a registration certificate) operated with retrospective effect as from the date on which the respondents were liable to apply for a registration certificate. (iv) Whether on the facts and in the circumstances of the case, the respondents are entitled to claim a set-off of the tax paid on purchases made from registered dealers between 1st April, 1954, and 13th July, 1955 (notwithstanding their failure to comply with the provisions of rules 11(12) and 11(4) of the Bombay Sales Tax (Exemptions, Set-off and Composition) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case the registration certificate issued to the opponents can be deemed to be a certificate issued under sub-section (3) of section 11 of the Act with effect from 1st April, 1954. (2) Whether on the facts and in the circumstances of this case the opponents are entitled to a set-off under sub-rule (2) of rule 11 of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, in respect of an amount equal to the aggregate sums recovered from them by registered dealers by way of general sales tax on the purchases of goods made by them during the relevant period." It is conceded by the learned Advocate-General that no question relating to penalty need be referred to the High Court in view of the decision of this Tribunal that a penalty is outside the scope of section 34 of the Act. We refer the two questions stated above for the decision of the High Court. H.D. Banaji instructed by Little Co., for the applicant. R.V. Patel, for the respondents. JUDGMENT V.S. DESAI, J.-The opponents are dealers carrying on business of selling and supplying textile cloth within the State of Bombay. During the period 1st April, 1954, to 13th July, 1955, their turnover had exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m by registered dealers by way of general sales tax on the purchases of goods made by them during the relevant period." Now, on the 13th September, 1956, proceedings had been instituted against the opponents for having committed an offence under section 36 of the Bombay Sales Tax Act, inasmuch as they had carried on business as a dealer without applying for registration in contravention of section 11 of the Act. The offence in respect of which these proceedings were commenced was, however, compounded by the Collector under section 39 of the Act on payment of Rs. 250 by the opponents. It was argued by the opponents that under section 11(5) of the Act, since they had paid the composition money under section 39 in respect of their contravention of sub-section (1) of section 11 of the Act, the Collector was bound to register the opponents as dealers, and grant them a certificate of registration which was to have effect as if it had been made on their application under sub-section (3) of section 11. It was contended on their behalf that the effect of the provisions of section 11(5) was that they must be deemed to have been registered dealers with effect from 1st April, 1954, as a resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Bombay Sales Tax Act, 1953. The reference which can be made under the said section is one with regard to any question of law which arises out of the Tribunal's order under section 30(2) or section 31(1) affecting any liability of any person to pay the tax. According to Mr. Patel the Tribunal's decision and order in the present case was not with regard to the liability of the opponents in respect of the tax to be paid by them, but with regard to the set-off claimed by them. "Tax" is defined in section 2(13) of the Act as "the sales tax. general sales tax or the purchase tax payable under this Act" and these taxes have been defined as meaning respectively the taxes leviable under sections 8, 9 and 10 of the Act. Mr. Patel argued that the set-off which is allowed under the rules made under section 18-B of the Act is not a tax leviable under the Act. It may be, says Mr. Patel, that the set-off which is allowable is considered in assessing the tax payable by a registered dealer and the assessment order may deal with the claim as to set-off but since the setoff is not a tax as defined under the Act, the assessment order in so far as it relates to the claim of set-off is not an order r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes: "In assessing the general sales tax payable by a registered dealer in respect of any period, the Collector shall grant him a drawback, setoff or refund, as the case may be, for an amount equal to the aggregate of the sums recovered from him by registered dealers by way of general sales tax on his purchase of any goods on or after 1st April, 1954, at a time when he was a registered dealer, where- (a)(i) such purchases were made by him at a time when he was a registered dealer but did not hold a licence under section 12, or (ii) such purchases were made by him when he was not a registered dealer but were made between the date on which he applied for registration under rule 3 of the Bombay Sales Tax (Registration, Licensing and Authorization) Rules, 1954, and the date on which he was registered, and (b) such goods have during the period in respect of which he is being assessed, been re-sold by him, or (c) such goods being other than those specified in entries 1 to 18 (both inclusive) of Schedule B to the Act have been used by him as raw materials, processing materials, machinery, tools, plant, equipment, fuel, lubricants, containers or packing materials in the manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed period. That prescribed period is 30 days after the turnover of the dealer exceeds the limits specified in section 5. Under section 11(3), the Collector on satisfaction that the application made by the dealer for registration is in order is required to grant him (dealer) a certificate of registration. The Collector's power to grant a registration certificate is on a satisfaction that the application made to him for registration is in order, and in order that the application should be in order, it must have been made within 30 days of the turnover exceeding the limits specified in section 5. The effect of this provision is that there would not be any power in the Collector to grant the registration certificate if the application for the registration certificate is made by a dealer beyond 30 days after his turnover has exceeded Rs. 30,000. The fiction in section 11(5) provides that on conviction or composition of the offence committed by the dealer in carrying on business in contravention of section 11(1), the Collector will treat the case of the dealer as if there is an application made by him in proper form, and grant him the registration certificate. It may therefore be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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