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TMI Blog1964 (5) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... les Tax Officer and dismissed the appeals in respect of the assessments for four quarters ending 30th June, 1955, 31st December, 1955, 31st March, 1956, and 30th June, 1957. As regards the assessment for the remaining four quarters, the appeals against the orders of the Sales Tax Officer were heard by one Shri S.K. Das, Appellate Assistant Commissioner, who took the view that so long as the purchasing dealer held a valid certificate of registration which was seen by the assessee the latter was entitled to the deductions, and it was not his look-out further to examine and find out if the purchasing dealer was really a genuine person or a bogus person or else whether he was a "dealer" at all. The State of Orissa filed four appeals against these appellate orders of the Appellate Assistant Commissioner, Sri Das, and the assessee also filed four appeals against the orders of Sri L.C. Sahu. All the eight appeals were heard by the Member, Sales Tax Tribunal, before whom there was no challenge against the finding of the lower court that the certificates of registration were obtained fraudulently either in the names of fictitious person or of persons who had no business at all. On these und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugust of every year. 4.. Section 5 of the Act is the charging section and subsection (2)(A) of section 5 says that "taxable turnover" for the purpose of assessment of sales tax shall be the gross turnover of a dealer after making deductions permissible under the various clauses of that section. Sub-clause (ii) of clause (a) of sub-section (2)(A) of that section says that sales to a registered dealer of goods specified in the purchasing dealer's certificate of registration as being intended for resale by him in Orissa may be deducted from the gross turnover. Here also it will be noticed that the statute uses the expression "sale to a registered dealer" and does not say "sale to a dealer holding a certificate of registration". Sub-section (2)(B) of that section confers rule-making power for the purpose of prescribing the mode of proof of the deductions. Rule 27(2) of the Orissa Sales Tax Rules made in pursuance of this sub-section, says that: "a dealer who wishes to deduct from his gross turnover the amount of sale on the ground that he is entitled to make such deduction..... shall produce a true declaration in writing by the purchasing dealer or by such responsible person as may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business and so long as the assessee in good faith sells goods to that person he is entitled to ask for the permissible deduction. It was also urged by Mr. Misra that by holding out that the purchaser is a registered dealer, by showing his name in the certificate of registration and by publishing his name periodically in the Gazette, as required by rule 19, Government themselves represented to the other dealers that these persons were registered dealers and consequently the principle of estoppel by conduct must apply and Government should not be permitted to say in a subsequent assessment proceeding against a bona fide seller to that person that the person represented as a registered dealer was not a registered dealer. 8.. This leads to a consideration of the most important question of law arising in this case, namely, whether, on the facts found, the rule of estoppel would apply against the State. Though there are no decisions under the Sales Tax Act there are several decisions under the Indian Income-tax Act which afford guidance. But the general principle that the rule of estoppel by record does not apply to taxation matters is well known-See the Supreme Court judgments i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of registration to them should be held to have been made by mistake. The Sales Tax Authorities had no jurisdiction to grant such certificates to fictitious persons or to persons who had no business. Hence though these persons may technically be said to be holders of registration certificates, nevertheless, in the eye of law, they cannot be held to be registered dealers because they have not been "validly" registered under the provisions of the Act and any mistake committed by the subordinate officers of the Sales Tax Department, either due to negligence or due to collusion, cannot, on general principles, operate as estoppel against Government. 10.. It was urged however that such a view would put an onerous burden on the assessee and compel him to make elaborate enquiries about the validity of the certificates of registration granted to dealers who may purchase goods from him. This argument is not convincing. If the assessee wants a certain amount to be deducted from the turnover on the ground that it is a permissible deduction under the provisions of the statute, the burden of proving the deduction initially lies on him. It is true that the production of certificates of registr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be conclusive of the facts stated therein, the Legislature would surely have inserted a provisions to that effect in the Act. 11.. Mr. Misra relied on some observations of a Bench of this Court in Netrananda v. Commissioner of Sales Tax, Orissa[1961] 12 S.T.C. 169., where it was held that the rule of estoppel may arise on a statement of fact on the basis of which a person took some action or omitted to take action. Here also the State may not be permitted to say that the purchasing dealer in fact did not get himself registered. But the question as to whether such registration is valid or not is a pure question of law, and the rule of estoppel will not apply. Mr. Misra also relied on the observations of the Bombay High Court in Varjivandas Hirji Co. v. Commissioner of Income-tax, Bombay City II [1958] 34 I.T.R. 21., where it was held that once the Income-tax Authorities after due enquiry granted a certificate of registration under section 26-A they cannot for the year for which the certificate of registration was given ignore the entries made in that certificate and make an independent enquiry to find out who, in fact, or in law, were the partners of the registered firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of estoppel by conduct has not been considered in this decision, with great respect, we are unable to accept that decision as completely laying down the law on the subject. 13.. In England also there can be no estoppel against the Crown in taxing matters: See Halsbury, Volume 20 (Third Edition), page 735 (paragraph 1431). "An inspector of taxes cannot bind the Crown by entering into an agreement purporting to conclude tax, etc., questions for future years, nor would such an agreement or expression of opinion offered, or course of action adopted by an inspector of taxes create an estoppel against the Crown". Doubtless as regards proprietary interest, there may be estoppel by conduct known as estoppel by pais-see Attorney-General to His Royal Highness The Prince of Wales v. Collom[1916] 2 K.B. 193. and also Robertson v. Minister of Pensions[1949] 1 K.B. 227. The same principle seems to be applicable in America also. In Corpus Juris Secundum (Volume 31) at pages 434-435, the law on the subject was summed up as follows: "Taxation being a Governmental rather than a proprietary function, ordinarily there can be no estoppel against a Government or Governmental agency, wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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