9911796707
TMI Blog1981 (10) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 1969, the assessee had effected inter-State sales to the tune of Rs. 12,04,287. Out of these sales, no amount of tax was collected on the sales of Rs. 11,32,259 under the Central Act. However, in respect of the remaining sales of Rs. 72,029 the amount of tax at the rate of 3 per cent was separately collected and paid along with the returns. In the quarterly returns filed for the respective quarters commencing from 18th July to 30th September, 1968, 1st October, 1968, to 31st December, 1968, and 1st January, 1969, to 31st March, 1969, the sales on which no amount of tax was separately collected were shown as free of tax and consequently no amount of tax was paid on these sales along with the returns. At the stage of assessment, the assessee claimed that these sales of Rs. 11,32,259 were not liable to tax under section 10(1) of the Central Sales Tax (Amendment) Act, 1969 (hereinafter referred to as "the Central Amendment Act"), on the ground that there was no tax liability in respect of these sales as prescribed under section 10 of the Central Amendment Act. It should be noted at this stage that the assessee had produced before the Sales Tax Officer at the time of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be levied or collected? (2) Whether, on the facts and in the circumstances of the case, the findings of the Tribunal that the story of the applicant that the declarations in form C were obtained by it in 1973 appears to be false; is vitiated being perverse and without taking into account the relevant documentary evidence and facts? (3) Whether, on the facts and in the circumstances of the case, the findings of the Tribunal to the effect that the applicant could not get declarations in form C in respect of sales to Ajudhia Textiles Corporation relating to the period of assessment as the record of the mills were spoiled in 1971 and could not be available in 1973; is vitiated for not taking into account the relevant facts and documents? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the applicant was not entitled to claim exemption on the sales of Rs. 11,32,257 under section 10 of the Central Sales Tax (Amendment) Act, 1969?" The Tribunal refused to grant the reference since in its opinion the questions arising out of the order were pure questions of fact and no question of law arose out of its order. The assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner of levy of tax on the specified goods which were taxed only at a single point under the State Act. With a view to meet with the effects and consequence ensuing as a result of this decision of the Supreme Court in Lakshminarasimhiah Setty's case [1965] 16 STC 231 (SC), the Central Sales Tax (Amendment) Ordinance, 1969, was promulgated with effect from 9th June, 1969, which was followed by an Act which replaced the Ordinance, namely, the Central Sales Tax (Amendment) Act, 1969, which was put into effect on 30th August, 1969. The said Ordinance and for that matter the Central Amendment Act sought to validate the assessments and reassessments and levy and collection of any tax made by the authorities and anything done or purported to have been done for the enforcement of such assessments or reassessments. This validation was sought to be effected by substituting subsection (1A) of section 6 of the Central Act. The new sub-section (1A) provided as under: "(1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h tax could have been levied or collected. (d) Such non-collection must pertain to such sales or any portion of the turnover relating to such sales. (e) No such tax could have been levied or collected but for the Amendment Act. It is in the context of this legal background that we have to answer the question referred to us. Two preliminary objections were raised by the learned Government Pleader appearing for the State Government. In the first place, he contended that the finding of the Tribunal that the failure of the assessee to collect tax was not on the ground that no such tax could have been levied or collected but was on other grounds as found by the Tribunal is purely a finding of fact arrived on appreciation of relevant evidence and material. In the second place he contended that no specific question has been referred to us challenging the finding of fact made by the Tribunal as without any evidence and, therefore, it is not open to the assessee to assail this finding. Before we dispose of these contentions, we must remind ourselves of the exact limitation of the jurisdiction of this Court hearing references under section 69 of the Gujarat Act. In Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion was raised and referred to the High Court. Jaganmohan Reddy, J., stated as under in that behalf: "In our view there can be no doubt that unless the Tribunal has been asked to refer a question impugning the validity of the findings sustainable on any principle of law, the facts stated in the statement of the case would form the basis on which the legality or otherwise of the assessment would alone require to be considered by the High Court. In this case the revenue had in its application under section 66 of the Act asked for specific reference on the question: * * * This question was repeated in its application under section 66(2), but perhaps the High Court thought that questions Nos. (2) and (3) on which it directed the Tribunal to state a case would cover the scope and ambit of question No. (3) on which the revenue had asked for reference.................." We need not repeat the facts, which we have stated herein above, but having regard to the application which the assessee had made before this High Court where specifically the question assailing the finding of fact made by the Tribunal was raised as to whether on the facts and in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n should, therefore, also be rejected since this is precisely the grievance of the assessee that the Tribunal has not only misread the evidence and acted on irrelevant material but has ignored the material and important evidence which substantiated the claim of the assessee for exemption. Before we deal with the grounds urged on behalf of the assessee, we will shortly state as to what weighed actually with the Tribunal in reaching the conclusion that the assessee had failed to discharge the burden of proving that no tax was collected under the Central Act on the ground that such tax could not have been levied or collected in respect of the inter-State sales to the tune of Rs. 11,32,259. Broadly stated, the following five factors impressed the Tribunal in reaching the conclusion as it did: (a) The sales in question were declared to be subject to declarations in form C. (b) All the contracts of the sales in question were f.o.r. destination. (c) The assessee obtained declarations in form C in respect of the sales for which the exemption was claimed under section 10. (d) Inconsistent conduct on the part of the assessee in recovering the tax inasmuch as it recovered the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Tribunal comprises of the claim of exemption made in the quarterly returns and the assertions made in the two letters addressed by the assessee to the Sales Tax Officer as well as the Assistant Commissioner of Sales Tax in June, 1973. The letter addressed to the Sales Tax Officer is dated 21st June, 1973, and the letter addressed to the Assistant Commissioner of Sales Tax is dated 26th June, 1973. It is really a matter of surprise as to how the Tribunal completely ignored these two important letters which establish the grounds on which the assessee decided not to collect the tax from its up-country constituents. It is a greater surprise to us that when the Tribunal considered even the subsequent conduct of the assessee in collecting the tax on similar transactions in the period immediately following the period under reference, it ignored completely the evidence of the conduct which is contemporaneous and exhibited at all relevant times of assessment. In the letter addressed to the Sales Tax Officer dated 21st June, 1973, the assessee referred to the final hearing given by the Sales Tax Officer to the assessee on 2nd May, 1972, in which hearing the applicability of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this course with a view to minimise our tax liability and for abundant caution. 8.. In the circumstances, we have to request you to give us one month's time for production of declarations in form C after obtaining from the above dealers." (emphasis* supplied) It appears that five days after the aforesaid letter, the assessee addressed a letter to the Assistant Commissioner of Sales Tax setting out its grievance that the Assistant Commissioner has instructed the Sales Tax Officer to assess the assessee in pursuance to pre-audit scrutiny made by him though the assessee was clearly given to understand by the Sales Tax Officer that the assessee was not liable to pay tax on the inter-State sales where no tax was collected by it and exemption was claimed in quarterly returns in view of the Supreme Court judgment in Lakshminarasimhiah Setty's case [1965] 16 STC 231 (SC) under section 10(1) of the Central Amendment Act. The assessee also placed on record by its letter that he had personally called upon and met the Assistant Commissioner for a number of times since the submission of the case papers in the middle of May, 1972. The assessee also pointed out that the instruction by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate for the assessee in his arguments before the Tribunal. We have not been able to appreciate the precise implication of this contention of the learned Government Pleader. It is not contended and it is not possible to contend that this question of exemption in respect of these sales in the course of inter-State trade and commerce was not before the Tribunal. It was precisely and the only question which was before the Tribunal. The Tribunal has, while summarising the contentions urged on behalf of the assessee before it, recorded that at the stage of assessment on behalf of the assessee (appellant before the Tribunal) it was contended that in respect of the sales of Rs. 11,32,259 the purchases were made from local registered dealers and, therefore, there was no tax liability in respect of these sales under the Bombay Sales Tax Act as per the decision of the Supreme Court. in Lakshminarasimhiah Setty's case [1965] 16 STC 231 (SC) and accordingly while filing the returns these sales were shown as not liable to tax under the Central Act. The Tribunal has further recorded in paragraph 5 of its order as under: "5. Shri Pathak, very strongly relying on the manner in which the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee was whether this non-collection was on the ground that no tax could have been levied or collected. The very fact that the Supreme Court has pronounced the law in Lakshminarasimhiah Setty's case [1965] 16 STC 231 (SC) indicates that no tax could have been levied on such transactions. This decision had been rendered on 10th November, 1964, and with effect from this date the assessee could not have levied or collected the tax in respect of such inter-State sales as held by the Andhra Pradesh High Court in Reddy Company, Tenali v. State of Andhra Pradesh [1973] 32 STC 399 since the assessee is supposed to know the law. Apart from this decision of the Andhra Pradesh High Court, even if it is required to be proved de hors the decision of the Supreme Court, that the non-collection was on the ground that no such tax could have been levied or collected, it requires evidence of the conduct of a dealer in question and in our opinion the aforesaid two letters establish clearly that the assessee did not collect the tax as it could not have and it did not in fact collect in the light of the decision of the Supreme Court in Lakshminarasimhiah Setty's case [1965] 16 STC 231 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could have been levied or collected on such sales can be resolved. In so far as the Tribunal has failed to consider this important piece of evidence of the conduct of the assessee in proper perspective that has vitiated its findings. The learned Government Pleader, however, urged that even if we consider this evidence, the finding which has been made by the Tribunal which is under challenge in this reference before us, was well-founded and justified on the evidence of the other conduct of the assessee which has been considered and evaluated by the Tribunal. The learned Advocate for the assessee, however, joined issue with the learned Government Pleader that the finding of the Tribunal was valid and legal since in the submission of the learned Advocate for the assessee the Tribunal has laid wrong emphasis on the circumstances which are perfectly innocuous and entirely irrelevant and could not have warranted the conclusion reached by the Tribunal. We are of the opinion that the submission of the learned Advocate for the assessee has great force in it. The reasons of our agreement with him are obvious. In the first place, the Tribunal has attached great importance to the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this circumstance is an irrelevant circumstance which cannot be loaded against the assessee so as to prejudice its claim for exemption more particularly when at the fag-end of the assessment proceedings in view of some development taking place when the Sales Tax Officer was inclined to bring such sales to tax in the light of instructions received from the higher authorities the assessee prayed for grant of some time so as to enable it to obtain the declarations which the assessee in its aforesaid letter claimed without prejudice to its main contention for exemption. It should be noted at this stage that the assessee was required to move the Assistant Commissioner for appropriate directions to the Sales Tax Officer to grant him time so that the assessee may obtain declarations in C form with a view to limit its liability if at all the authorities were inclined to charge the said sales under the Central Act. The emphasis which the Tribunal has, therefore, laid on this factum of production of the declarations in form C is not at all justified in view of what has been clearly stated by the assessee in its aforesaid two letters. The mere fact that in the bills for the supply of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of the contract that the goods were to be delivered f.o.r. destination or that the price was inclusive of sales tax would be though relevant but innocuous circumstance, inasmuch as it has bearing only so far as the non-collection of the tax is concerned. The condition would only mean that in case if there is a tax liability that would be borne by the assessee. It cannot have bearing on the real question as to whether non-collection was on the ground that no tax could have been collected or levied. under the Central Act. That question has to be determined independently by any cogent evidence in that behalf. The Tribunal has also laid down emphasis on what is called inconsistent conduct on the part of the assessee in so far as the assessee collected the tax on similar transaction from the same up-country constituents for the period under reference. The Tribunal has referred to this conduct in paragraph 2 of its order in the following terms: "2. ..........The appellant has not followed any consistent policy so far as the charging of the tax separately or otherwise is concerned. It appears that the Sales Tax Officer had addressed letter to some up-country dealers to whom the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the finding reached on the basis of the simultaneous consideration of the relevant and irrelevant consideration vitiated the findings. We do see force in this contention. We are however, of the opinion that the Tribunal has lost sight of the provision contained in section 10 where a dealer is entitled to claim exemption in respect of the sales effected during the prescribed period or any portion of the turnover relating to such sale. If, therefore, in a given assessment period, a dealer claims exemption in respect of certain sales or turnover of sales and on a part of which he has collected tax, his claim for exemption in respect of the remaining turnover cannot be negatived on the ground that because he has collected tax in respect of a part of the turnover he is not entitled to claim exemption on the rest. The noncollection of tax on the sales effected in the course of the prescribed period would entitle a dealer to claim exemption or would qualify him for exemption if it can be established that the non-collection was on the ground that no tax could have been levied or collected. The ground for non-collection can be substantiated by cogent, clear and satisfactory evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Pradesh High Court in Reddy Company's case [1973] 32 STC 399 has also upheld the claim of a dealer on the ground that as the period in the case before the Andhra Pradesh High Court was subsequent to the decision of the Supreme Court in Lakshminarasimhiah Setty's case [1965] 16 STC 231 (SC) the assessee must have been under bona fide impression that no such tax could have been levied or collected in respect of such inter-State sales and the assessee had not collected the Central sales tax in respect of that period on the ground that no tax could have been levied or collected. In other words, the Andhra Pradesh High Court has held that the non-collection of tax after the decision of the Supreme Court in Lakshminarasimhiah Setty's case [1965] 16 STC 231 (SC) must be held to be non-collection by the dealer on the ground that no such tax could have been collected or levied. In the ultimate analysis it is a question which is to be determined on the facts and in the circumstances of each case. The result, therefore, is that this reference should be accepted and we answer the question referred to us in the negative, that is, in favour of the assessee and against the State Government. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
