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TMI Blog1972 (1) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... m represented the sale proceeds of the goods sold to M/s. Refrigeration Products on 31st May, 1966. This claim was disallowed by the Assessing Authority on the ground that on the date of the sale, the purchasing dealer did not hold a registration certificate under the Act, though it was proved that on the date of the sale an application for such registration of the purchasing dealer was pending, and, in fact, the requisite certificate of registration was granted to the purchasing dealer on 3rd June, 1966. The first appeal of the assessee was dismissed by the Appellate Authority on 30th June, 1969. Their second appeal was also dismissed by the Sales Tax Tribunal on 5th August, 1970. Aggrieved by that order of the Assessing Authority (upheld by the Appellate Tribunal) M/s. Chandra Industries invoked the writ jurisdiction of this court under article 226 of the Constitution. The only question that falls to be determined in this case is: whether a dealer registered under the Act is in the matter of his liability to pay tax, entitled under section 5(2)(a)(ii) to deduct from his gross turnover proceeds of the sale of goods made to a dealer during the period when the application of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactures or processes any goods for sale, the liability to pay tax shall commence with effect from the date on which his gross turnover during any year first exceeds the taxable quantum. (2A) Notwithstanding anything contained in sub-sections (1) and (2), no tax on the sale of any goods shall be levied if a tax on their purchase is payable under this Act. (3) Every dealer who has become liable to pay tax under this Act shall continue to be so liable until the expiry of three consecutive years during each of which his gross turnover has failed to exceed the taxable quantum and such further period after the date of such expiry as may be prescribed, and on the expiry of this latter period his liability to pay tax shall cease. (4) .................................. (5) In this Act the expression 'taxable quantum' means.................................. (d) in relation to any other dealer, 40,000 rupees: Provided that the registration of dealers already registered under this clause shall not be cancelled until their turnover in each of three consecutive years does not entitle them to cancellation under clause (b) of subsection (6) of section 7." "5. (1) Subject to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant him a certificate of registration in the prescribed form which may specify the class or classes of goods for the purposes of sub-clause (ii) of clause (a) of sub-section (2) of section 5. (4) The Commissioner may from time to time, by order, amend or cancel any certificate of registration on (a) information furnished under section 16; or (b) information received that the dealer has violated any provision of this Act or the rules made thereunder; or (c) any other sufficient cause including misuse of the certificate or cessation of liability to payment of tax under this Act: Provided that no order affecting any person adversely shall be made under this sub-section without affording him a reasonable opportunity of being heard. (5) When any dealer has paid the amount of penalty imposed under section 23 in respect of any contravention of sub-section (1) of this section, the Commissioner shall register such dealer and grant him a certificate of registration, and such registration shall take effect as if it had been made under sub-section (3) of this section on the dealer's application." "11. (6) ...in cases where such dealer has wilfully failed to apply for registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit, and a declaration in writing in Form S.T. XXII by the purchasing dealer or by his agent, that the goods in question are intended for resale in the State of Punjab or such goods are specified in his certificate of registration for use by him in the manufacture in the State of Punjab of any goods for sale." Form S.T. XXII of the declaration to be furnished under the old rule 26 is as under: "FORM S.T. XXII Declaration to be furnished by a registered dealer purchasing goods from another registered dealer. (See rules 26 and 27-A of the Punjab General Sales Tax Rules, 1949). I......holder of registration certificate No......hereby declare that I have purchased the goods hereinafter mentioned for the purpose of: (1) use in the manufacture in the State of Punjab of any goods for sale; (2) resale in the State of Punjab; or (3) sale in the course of inter-State trade or commerce; or (4) sale in the course of export out of the territory of India and the goods so purchased for the purpose mentioned at (1) above are duly specified in my aforesaid registration certificate. ------------------------------------------------------------------------- Description Quantity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he is required to do by sub-sections (2) and (3) of section 7 and rule 5, be penalised under section 23(1) read with sub-section (1) of section 7? In my opinion, the answer to this question must be in the negative. Sub-section (1) of section 7 is not to be construed in isolation; but is to be read together with sub-sections (2) and (3) of the same section. Similarly, section 11(6) and section 23(1) are complementary to each other. The words "registered" and "possesses a registration certificate" in section 7(1), therefore, take colour from the succeeding sub-sections (2) and (3). It could never be the intention of the Legislature that a dealer liable to pay tax, who has done all which lay in his power to obtain the registration certificate, should pull down his shutters and keep his business closed under pain of being punished under section 23(1) and await indefinitely the pleasure and leisure of the prescribed authority in issuing the registration certificate. Adoption of such a construction would be to make the applicant liable to punishment for the laches and delays of the authority and its office. The dealer's duty to make application to get himself registered starts wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale. It may be obtained subsequently and furnished along with his return by the selling dealer if the latter wants the amount of any such sale to be deducted from his gross turnover. In the absence of anything to the contrary in the Act, it will be in consonance with reason and equity to hold that the intention of the Legislature was that in the case of a dealer who makes the application simultaneously with the incurrence of liability to pay tax, the registration certificate takes effect from the date of the submission of the application. To hold otherwise would be to penalise the applicant-dealer for the lapse and vagaries of the office of the prescribed authority. The matter can be looked at from another aspect also. Rule 5 was amended by a Government Notification dated 10th October, 1966. (The amended rule 5 is reproduced above). The amended rule 5 expressly says that the registration certificate can be valid from the date of the application. Assuming for the sake of argument that the provisions of the Act, particularly, sections 5 and 7 read together are susceptible of one and only one construction, i.e., that the registration certificate takes effect only from the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department treated the assessee as not having been registered for the period between the date of making the application and the issue of the registration certificate and accordingly assessed him to sales tax under rule 12(6). The learned Chief Justice, who spoke for the Bench, set aside this assessment with these observations: "Once the registration certificate was granted, it must be operative from the date of the application. It was not open to the department after the grant of registration certificate to say that during the relevant period the assessee was an unregistered dealer. That conclusion was possible only if the application had been rejected for non-removal of defects when it could be said that no application for registration had been filed." Though the facts of that case were different, yet the principle laid down is fully applicable in the instant case The third case cited by Mr. Awasthy is Orient Paper Mills Ltd. v. Commissioner of Sales Tax, Madhya Pradesh, Indore, and Another[1969] 23 S.T.C. 308. That was a case of amendment of the registration certificate. The question was: whether the amendment would take effect from the date of the order or relate back to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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