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TMI Blog1971 (5) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner for the manufacture of cloth under section 5(2)(a)(ii) of the Act. The petitioner has objected in the present petition to this assessment. The State has filed the return and has controverted the stand taken by the petitioner. While dealing with the various contentions advanced at the Bar, the respective stands of the parties would be apparent. The contentions advanced by the learned counsel for the petitioner may now be enumerated. They are as follows: 1.. That under the registration certificate, the petitioner being a manufacturer of cloth could buy the goods that have been brought to tax under section 5(2)(a)(ii) for manufacturing tax-free goods, i.e., cloth, and therefore, the use of these goods for the manufacture of cloth is not liable to tax under the aforesaid provision. 2.. That the return was filed in form S.T. VIII which has nothing to do with the use of goods for the manufacturing business of the petitioner and, therefore, there was no return regarding the purchase of goods on which purchase tax could be levied. The contention, in short, is that what is sought to be levied from the petitioner is purchase tax which cannot be levied as items which he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaration duly filled up and signed by the registered dealer to whom the goods are sold and containing prescribed particulars on a prescribed form (obtained from the prescribed authority) is furnished by the dealer who sells the goods: Provided further that when such goods are used by the dealer to whom these are sold for purposes other than those for which these were sold to him, he shall be liable to pay tax on the purchase thereof at such rate, not exceeding the rate of tax leviable on the sale of such goods, as the State Government may by notification direct in respect of a class of dealers specified in such notification, notwithstanding that such purchase is not covered by clause (ff) of section 2." Clauses (iv) to (vii) of sub-section (2)(a) are not relevant for our purposes. Sub-section (3) provides an exemption in respect of the declared goods and at what stage the tax would be levied thereon. It is really the two provisos to section 5(2)(a)(ii) that are relevant for purposes of the contention that has been raised. In order to examine the validity of the contention, we have to see what has exactly happened? The petitioner purchased under his registration certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alers of goods which are subsequently sold by them without undergoing any process of manufacture, milling, etc. Such sales are regulated by clause (b) of sub-section (2) of section 7. If, in respect of such sales, the purchasing dealer mentions in his certificate of registration that those goods were intended for sale by him inside Bihar or in the course of inter-State trade or commerce or export out of the territory of India or for use by him in the packing of goods [sub-clauses (i) and (ii) of clause (b)], the sale price on account of such sales may be excluded from the turnover of the selling dealer. But the second proviso is in the nature of a provision for preventing evasion. If the purchasing dealer, after obtaining them from the selling dealer free from sales tax, utilises the goods for purposes other than those mentioned in his declaration, he is penalised by the inclusion in his taxable turnover of the sale price of the goods so purchased. This liability is in addition to other penalties provided in the Act for contravention of a declaration made under the provisions of the Act...... Even if the view taken by the Sales Tax Tribunal regarding the applicability of the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t respect to him we have no hesitation in saying that that view would be unsupportable. However, that is not the case. The learned Judge proceeded on a simple basis, the basis being admitted before him, namely, that in the declaration furnished at the time of the purchase of the goods, it was specified that the goods were being purchased to manufacture (1) C.W. No. 1287 of 1968 decided on 10th February, 1970; printed at page 439 infra. tax-free item. Therefore, the purchaser of goods committed no violation of his registration certificate. On the face of that certificate, the seller had to recover sales tax and the incidence of that tax fairly and squarely fell on the seller. In that situation, the learned judge came to the conclusion that the provisions of section 5(2)(a)(ii) could not be made applicable and tax recovered from the purchaser of goods. There can be no quarrel with this proposition and Mr. Sibal, learned Advocate-General concedes that on that assumption no fault could be found with the decision of Tuli, J. Therefore, this decision is of no assistance to the learned counsel for the petitioner. If the scheme of the Act and the considerations we have mentioned above ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "The contention that the charging section is incomplete without the prescription of the proper form for the certificate of registration need not detain us. We have already shown that the old form must be deemed to be modified and even otherwise the section and the rules did not depend on the new form. They were complete and effective. The registration certificate was only the evidence that the company was a registered dealer for purposes of certain commodities to be used in manufacture, one of them being cotton. The omission to prescribe the new form or to issue it did not render section 5 and the rules ineffective." We see no infirmity in the Act which stands in the way of collection of tax due under section 5(2)(a)(ii). There is no substance in the third contention. For the reasons recorded above, this petition fails and is dismissed with costs, which are assessed at Rs. 200. Petition dismissed. Appendix The petitioner is a firm registered under the Indian Partnership Act and carries on business at Smalkha in the district of Karnal. The firm is registered as a dealer under the Punjab General Sales Tax Act (hereinafter called the Act) and the Rules made thereunder. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1948, under the second proviso to section 5(2)(a)(ii) of the Act ibid are not convincing. You are, accordingly, requested to furnish before me the relevant account books and also the details of purchases of gur made by your client on the strength of registration certificate under the Punjab General Sales Tax Act, 1948." The petitioner-firm then filed the present writ petition in this court on 8th April, 1968, which was admitted on the following day but the assessment proceedings were not stayed. It was, however, directed that after assessment is made, recovery would not be made if bank guarantee is given. During the pendency of the writ petition the Assessing Authority passed an order of assessment on 10th April, 1968, in order to challenge which the petitioner-firm amended the writ petition after obtaining the permission of this court. The assessment order is annexure 'E' to the amended writ petition. In this assessment order the gross turnover is mentioned as Rs. 2,28,312.93. Tax has been assessed under section 5(2)(a)(ii) of the Act on Rs. 1,31,522.31 at the rate of 6 per cent. amounting to Rs. 7,891.32. This figure of Rs. 1,31,522.31 represents the purchase value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or which it was sold to it. There was thus no misuse of the registration certificate by the petitioner-firm when it purchased gur free of tax for the manufacture of khandsari and gur-sheera on the strength of the registration certificate. The proviso to section 5(2)(a)(ii) of the Act has thus no applicability to this case. The dealer or dealers, who sold gur to the petitioner-firm on the basis of this registration certificate for the manufacture of khandsari and gur-sheera, may not be entitled to deduct from its their gross turnover the value of such sales as khandsari is a tax-free goods but the petitioner cannot be held liable to the sales tax department for the payment of sales tax on the purchase of that gur. It was open to the seller to realise it from the purchaser, that is, the petitioner, but it is not open to the department to realise it from the purchaser because it is, under the Act, payable only by the seller. The levy of sales tax on the amount of Rs. 1,31,522.31 at the rate of 6 per cent. is, therefore, liable to be quashed. For the reasons given above, I accept this writ petition with costs and quash the order of the Assessing Authority, Kamal, dated 10th April, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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