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TMI Blog1981 (2) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... authorized dealer to whom they would sell the goods in the course of inter-State trade or commerce or in the course of export out of the territory of India. By the said certificates they further certified that their authorization was in force on the date when they purchased the said goods. Under section 10(1)(iii) of the said Act the turnover of sales of goods by a registered dealer to an authorized dealer against a certificate in section 12, which is to be in form 14, is to be deducted from the turnover of sales of goods of the selling dealer for the purpose of arriving at his turnover subject to payment of sales tax, and similarly under section 10(1)(ii) such turnover is to be deducted for the purpose of arriving at the selling dealer's turnover subject to payment of general sales tax, that is to say, in view of the said certificates given by Messrs. H. Amritlal and Company, the applicants were not liable to pay either sales tax or general sales tax in respect of such sales. The deductions claimed by the applicants in respect of these sales were allowed by the Sales Tax Officer while assessing the applicants for the aforementioned period. Subsequently, however, the Sales Tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal that if these sales were taxable, they were subject to levy of tax at the rate mentioned either in entry 22 of Schedule E to the said Act or entry 43 of Schedule E (sic) to the said Act and not at the rate mentioned in entry 20 of the said Schedule E, as was applied by the Sales Tax Officer. These contentions were negatived by the Tribunal. At the instance of the applicants the Tribunal has stated this case and referred the following three questions to this Court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in disallowing the deductions in respect of the transactions of sale effected on 22nd November, 1965, 17th December, 1965, and 18th December, 1965, to Messrs. H. Amritlal and Company only on the ground that the registration certificate of the said vendor was cancelled by the order dated 13th September, 1966, with effect from 16th November, 1965? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in not going behind the order of cancellation of the registration certificate of Messrs. H. Amritlal and Company? (3) Whether the Tribunal was correct in law in holding that the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual date of the order of cancellation dealt with such third parties (sic). Mere cancellation of the registration certificate and the authorization of Messrs. H. Amritlal and Company cannot, therefore, deprive the applicants of the deductions to which they had become entitled on the dates of the sales to Messrs. H. Amritlal and Company. In this case, however, an additional factor arises, namely, that the Assistant Commissioner has held that the sales to Messrs. H. Amritlal and Company were not genuine. He has given three reasons for arriving at this conclusion, which reasons we have set out earlier. It is obvious that the third reason given by him, namely, that the registration certificate and the licence and authorization of the applicants (sic) were cancelled with retrospective effect from a date prior to the dates of the sales, can hardly be a ground for holding that the transactions were not genuine, and does not merit any consideration. Before coming to the other two grounds, it may be mentioned that the order of the Sales Tax Officer states that Messrs. H. Amritlal and Company were fictitious persons. It is not easy to understand what is meant by "fictitious". We are unable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax a sum of Rs. 10,000 in cash, or transfer to him by way of security Government securities of the value of Rs. 10,000, or furnish to the Commissioner the guarantee of a Government-approved bank agreeing to pay to the Commissioner on demand such sum not exceeding Rs. 10,000 as the Commissioner might certify as being due under the said Act from the applicant-dealer in respect of any period ending on the last day of the year following the year in which the licence, etc., is issued to him, or he has to furnish two sureties acceptable to the Commissioner for a sum of Rs. 10,000 each by executing a bond in the prescribed form. In the case of a dealer whose turnover of sales or purchases during the previous or current year did not exceed Rs. 50,000 and who does not hold an authorization or permit when he applied for a recognition, the said sum of Rs. 10,000 is to stand reduced to Rs. 5,000. There are various other requirements also provided in the said rule 12. Thus, before a dealer's application for registration is granted, an enquiry is to be made, and the registering authority is to be satisfied that the application is in order, that is to say, it has to verify the correctness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed by them. These are all conditions prescribed for granting a licence or an authorization, and it is, therefore, difficult to visualise how either of these two documents can ever be issued to "a fictitious person". It is also difficult to understand what the Assistant Commissioner meant by holding that the sales in question were not genuine. If he meant that in fact no sales had taken place, then the very foundation of levying sales tax on these transactions would disappear and these transactions would not be subject to any tax, because unless and until a sale has taken place in fact, no tax under the said Act would be leviable on it. If, however, what was meant was that these sales were sales to some party other than Messrs. H. Amritlal and Company, who are not registered dealers and did not hold an authorization, and merely certificates in the said form 14 were procured from Messrs. H. Amritlal and Company, then obviously the sales would not be to an authorised dealer, and the applicants would not be entitled to any deduction in respect of these sales. We do not, however, find either in the order of the Sales Tax Officer or of the Assistant Commissioner any finding or even a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any or not or were sales made to a third party and certificates procured from Messrs. H. Amritlal and Company. The facts of that case, however, were very different from the facts before us. In the order of assessment in that case the Sales Tax Officer had, after referring to various facts which according to him showed that there were no genuine sales by the assessees to Messrs. H. Amritlal and Company but the sales were to some other party in respect of which the certificates in question were procured from Messrs. H. Amritlal and Company in order to evade the incidence of general sales tax in respect of the said transactions, disallowed the claim for deductions made by the said Messrs. Chandulal and Company. These facts do not exist in the present case. Neither the Sales Tax Officer nor the Assistant Commissioner have even suggested that the sales in question were sales to third parties, and our judgment in the said Sales Tax Reference No. 34 of 1977(1) has no application to the facts of the present case. Turning now to the second question, it was urged by Mr. Joshi, the learned counsel for the applicants, that if an order of cancellation of the registration certificate, licence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery or plant)." Before the Tribunal it had been canvassed that if the transactions in question were taxable, they would be taxable either at the rate mentioned in entry 43 of the notification issued under section 41 or under the residuary entry 22 in Schedule E to the said Act. So for as the said entry 43 is concerned, it was contended that these surgical trays fell within items (2), (4), (6) and (8) of the said entry because these surgical trays were steel furniture. No one setting up a house has ever thought of buying surgical trays in order to furnish it, and this contention merely requires to be stated in order to be rejected. In fairness to Mr. Joshi it must, however, be said that before us this point was not pressed. It was the alternative contention which was pressed before us, namely, that these trays fell under the said entry 22. It was submitted that surgical trays were surgical instruments, and as there was no specific entry under which surgical instruments were covered, they would fall under the residuary entry 22 in Schedule E to the said Act. It is difficult to contemplate a surgical tray as being a surgical instrument. In popular parlance as also in trade us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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