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TMI Blog1966 (4) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. The claim for the abovesaid deductions was supported by the prescribed declarations of Messrs. L.C. Trading Company. By order dated 30th October, 1958 (annexure A) respondent No. 4, the Sales Tax Officer, disallowed the petitioners' claim for the deductions in question on the ground that the registration certificate of Messrs. L.C. Trading Company had been cancelled by order dated 25th August, 1958 (annexure R 2) with retrospective effect from 16th March, 1956, under section 7(6)(a) of the Act. I need not refer to deductions regarding sales to Messrs. Makan and Company which were also disallowed by the same order as the learned counsel for the petitioners has, at the hearing of the writ petition, expressly withdrawn the chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler cannot be penalised by a subsequent cancellation of the registration of the purchasing dealer with retrospective effect. Section 4 of the Act is the charging section which lays down that every dealer whose gross turnover exceeds the taxable quantum shall be liable to pay tax under the Act on all sales effected by him after the notified date. Sub-section (2) of section 4 provides for payments of sales tax under the Act by person to whom sub-section (1) of that section does not apply. The amount of tax depends on the taxable turnover and on the nature of the goods sold or purchased. Taxable turnover is defined in sub-section (2) of section 5 of the Act as the dealer's gross turnover during any period which remains after deducting therefro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 7. These read as follows: Section 7(6)-"When- (a) any business in respect of which a certificate has been granted to a dealer on an application made, has been discontinued or transferred, or (b) a dealer has ceased to be liable to pay tax under section 4 of this Act, the Commissioner shall cancel the registration." Section 7(7)-"The Commissioner may at any time for reasons to be recorded in writing and after giving the dealer an opportunity of being heard cancel any certificate of registration." A perusal of the ex parte order of cancellation of registration of Messrs. L.C. Trading Company (annexure R 2) shows that the cancellation was directed under clause (a) of sub-section (6) of section 7 of the Act on the solitary ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by Shri A.D. Pandit, the then Chief Commissioner, Delhi, in Sales Tax Appeal No. 85 of 1958 of Messrs. Chhabra Electric Stores, Sadar Bazar, Delhi, where the learned Chief Commissioner observed, inter alia, as follows: "I agree that such orders with retrospective effect should not ordinarily be passed by the Sales Tax Authorities............ It would be better, on the whole, not to follow such a procedure, so that honest firms along with the dishonest ones are not penalised because of the misdemeanour of the firm whose certificate of registration is cancelled, without the cancellation being widely known at the same time." In that judgment, the learned Chief Commissioner had, however, upheld the jurisdiction of the Sales Tax Authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint involved in the case, it appears to me that what is taxable turnover within the meaning of section 5(2)(a) of the Act depends on the situation as it existed during the period to which the turnover relates and no provision of law enables the taxing authorities to deprive a selling dealer of his right to claim deductions under sub-clause (ii) of clause (a) of subsection (2) of section 5 of the Act by subsequently cancelling the registration certificate of a purchasing dealer after the expiry of the period to which a deduction relates. In this view of the matter it does not appear to be necessary to decide the larger question raised by the learned counsel for the petitioners to the effect that the authorities have no jurisdiction at all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be a valid declaration at the time at which it is given and the liability of the selling dealer cannot be affected by subsequent invalidation of the declaration by the Sales Tax Authorities proceeding to cancel the purchasing dealer's registration with retrospective effect. Even the highest Sales Tax Authority in the Union territory, i.e., the Chief Commissioner of Delhi realised the hardship and absurdity resulting from retrospective effect being given to orders of cancellation, but the learned Chief Commissioner could not translate his sympathies into any concrete form. The selling dealer is not a party to the order of cancellation of registration. A purchasing dealer may for any reason ignore the proceedings and may allow an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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