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TMI Blog1981 (7) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent, at every point of sale in the State provided that-(a) where jaggery is sold to a dealer by a person who is not a registered dealer otherwise than through an agent, the tax shall be levied at the point of purchase and not at the point of sale at the rate of six paise in the rupee; (b) where any purchase of jaggery by a dealer is taxed in accordance with clause (a), the sale of such jaggery effected by the said dealer shall not be taxed again; and (c) where a registered dealer has purchased jaggery from another registered dealer and furnishes to the prescribed authority in the prescribed manner a declaration in the prescribed form and containing such particulars as may be prescribed duly filled and signed by the registered dealer from whom he purchased such jaggery the sale of such jaggery effected by the first mentioned registered dealer shall not be liable to tax. Rule 6-A of the A.P. General Sales Tax Rules, 1957, provides that the declaration referred to in proviso (c) to the Fifth Schedule shall be in form I. Rule 6-A, sub-rules (4) to (10), read as follows: "(4) Every dealer, who claims exemption from payment of tax on the sale of jaggery effected by him, by virtue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in transit or from the custody of the dealer he shall obtain a duplicate of the form with the following endorsement made in RED INK across the page in all the three parts and duly signed by the selling registered dealer. Until such a duplicate form is obtained, the sale in question shall not be eligible for exemption from tax: 'I,........................................., hereby affirm that this is a duplicate of the declaration form No.....................signed on..................and issued to............. who is paying tax on the rolls of the............(assessing authority). Signature of the selling registered dealer.'" Form I prescribed under rule 6-A(1) requires the declaration to contain the following particulars: "FORM I [See rule 6-A(1)] Form of declaration for jaggery dealers. Book No. Sl. No. 1.. Name and address of the office of the issue. 2. Name and address of the dealer issuing the declaration. 3.. Registration No. of the declarant and the name and address of the assessing authority. 4. Name and address of the purchasing dealer. 5. Registration No. of the purchasing dealer and the name and address of the assessing authority. 6. Quantity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificates in form I issued in their favour by their agents and claimed exemption on their sales of jaggery on the ground that they are second sales. The assessing authorities accepted the same and granted exemption and the petitioners believe that all the assessing authorities all over the State have been granting similar exemptions. In the circles relating to the jurisdiction of the Deputy Commissioner, Warangal, however, such exemption was being disallowed on the ground that forms I produced by the petitioners are not in accordance with rule 6-A. For the assessment year 1978-79, the petitioners have received show cause notices from the respondents proposing to disallow exemption on the second sales of jaggery even though covered by the declarations. The 1st petitioner has received the show cause notice dated 9th June, 1980, proposing to disallow exemption claimed by him. In W.P. No. 2354 of 1979, the petitioners are registered dealers in jaggery at Warangal. They purchase jaggery through their commission agents in regular markets at Kamareddy, Nizamabad and Jogipet. They were granted exemption by the appellate authority for the assessment year 1976-77. But the Deputy Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugust, 1976, in respect of the assessment year 1975-76 and by notice dated 3rd March, 1980, in respect of the assessment year 1977-78. In W.P. No. 2316 of 1980, the petitioners are registered dealers in jaggery at Warangal. For the assessment year 1978-79, the exemption claimed by them was disallowed on the ground that the petitioners failed to produce the declaration forms in form I as required under rule 6-A of the A.P. General Sales Tax Rules. In W.P. No. 2328 of 1980, the petitioners are registered dealers in jaggery at Warangal. For the assessment year 1978-79, the exemption claimed by them was disallowed on the ground that the declaration forms in form I as required under rule 6-A of the Rules were not produced. In W.P. No. 2329 of 1980, the petitioners are registered dealers in jaggery at Warangal. The exemption claimed by them for the assessment year 1977-78 was disallowed as the assessing authority did not accept the declarations obtained by the petitioners from the commission agents. In W.P. No. 3200 of 1980, the petitioners are registered dealers in jaggery carrying on their business at Madhira. The exemption claimed by them for the assessment year 1978-79 was disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if there is substantial compliance of the same. If the rule is interpreted otherwise, the dealers who buy jaggery through the agents are put to a disadvantageous position in not being able to claim exemption on the technical ground that the copy of the declaration furnished by the agent is not strictly in accordance with rule 6-A while dealers who purchase directly from the registered dealers can easily comply with the rule and obtain exemption. This amounts to hostile discrimination against persons like the petitioners who choose to purchase through agents and offends articles 14 and 19(1)(g) of the Constitution of India. If rule 6-A is read along with sub-rules (7) and (10) thereof, it will be clear that the requirement of filing original declaration is not absolute and that in some cases, a duplicate can also be received. We find no substance in the submission made that rule 6-A is beyond the rule-making power of the State and is, therefore, bad. The amending Act No. 5 of 1976 was passed to enable the Government to levy sales tax on jaggery sales. While, therefore, arming themselves with the power to levy sales tax at every. point of sale in the State, it was provided in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gent would retain the original declaration given by the selling registered dealer and the petitioners have all filed copies of the said original declaration in support of their claim for exemption and that it is for the assessing authorities to satisfy themselves whether the goods covered by the various pattis issued by the selling agents in favour of the petitioners have already suffered sales tax or not. Elaborating this submission, it is stated that the petitioners can purchase jaggery either by themselves or through commission agents and if the tax could not be levied on the commission agent even treating him as a registered dealer, such tax cannot be levied against the petitioners who, in their turn, have purchased the jaggery through such commission agents and the petitioners cannot be in a worse position than the commission agents themselves. We find considerable force in the submissions. A proper reading of proviso (c) under item 1 of the Fifth Schedule makes it clear that the main object is to levy the tax at the point of purchase and though it is provided that such levy can be made at every point of sale in the State, an exemption from a second levy on second and subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing authority concerned with the selling registered dealer or the commission agent through whom the petitioners have purchased the jaggery in question and satisfy itself that the disputed turnover has already suffered sales tax. In State of Orissa v. M.A. Tulloch and Co. Ltd.[1964] 15 S.T.C. 641 (S.C.)., the Supreme Court while considering an analogous rule 27(2) of the Orissa Sales Tax Rules, 1947, have observed: "The production of declaration under rule 27(2) is not always obligatory on the part of a selling dealer when claiming the exemption. It is open to him to claim exemption by adducing other evidence so as to bring the transaction within the scope of section 5(2)(a)(ii) of the Act..............................In our opinion, rule 27(2) must be reconciled with the section and the rule can be reconciled by treating it as directory. But the rule must be substantially complied with in every case. It is for the Sales Tax Officer to be satisfied that, in fact, the certificate of registration of the buying dealer contains the requisite statement, and if he has any doubts about it, the selling dealer must satisfy his doubts. But if he is satisfied from other facts on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion is a second sale may be established by adducing oral or documentary evidence." Adverting to the compliance with rule 45(3)(b), the learned Judge observed: "On a close and careful consideration of this rule and the relevant provisions of the Act, I am satisfied that the mere failure or omission on the part of the dealer to produce the bill or cash memorandum accompanied with the certificate as required by rule 45(3)(b) Would not ipso facto entitle the assessing authority to include such turnover in the assessment and levy tax thereon without affording a fair and reasonable opportunity to the assessee-dealer to prove his case by adducing any other evidence-oral or documentary. There may be cases of sale of jaggery by a ryot or agriculturist whose turnover is less than Rs. 10,000 in a year and who did not maintain any account. Such ryot or agriculturist might not have issued a bill or cash memorandum or the certificate as required by rule 45(3)(b) evidencing the first sale of the jaggery in question. In such cases, it is incumbent on the assessing authority to afford a reasonable opportunity to the dealer to establish his case by adducing any other evidence. The assessing aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its jurisdiction under article 226 of the Constitution of India. We have earlier observed that while some of the assessing authorities were prepared to accept the copies as sufficient proof for granting exemption, the Deputy Commissioner has expressed himself that the assessing authorities should not accept such copies as proper compliance with rule 6-A, sub-rule (4). The assessing authorities were feeling bound by the decision of the Deputy Commissioner and no useful purpose would be served if the petitioners pursued the remedy available to them by way of appeal. We are, therefore, inclined to hold that these are proper cases where we ought to exercise our powers under article 226 of the Constitution of India and grant the necessary relief to the petitioners. The learned Government Pleader has relied upon a judgment of a Bench of this Court in Soma Chandraiah and Sons v. State of A.P.T.R.C. No. 22 of 1977 decided on 1st November, 1977 (Andhra Pradesh High Court). In that case, the declaration as required under rule 6-A and the Fifth Schedule in support of the claim for exemption was not filed before the assessing authority, but the declaration forms issued by the purchasing com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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