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TMI Blog1983 (8) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... all furnish to the selling dealer a certificate in form III-A, duly filled in and signed by him." It entitles a dealer who does not want to pay tax on purchase of goods, mentioned in section 3-A and section 3-AA (which now stands deleted but was in force in the assessment years with which this petition is concerned) to furnish a declaration to its selling dealer that he was purchasing it for resale. What is the purpose of this rule? Why this exemption from tax? Is it to be read in isolation, as suggested by the learned counsel for the assessee, or it has been framed with objective. It is well-known that in the scheme of the Act goods are taxable either at single or multi-point. Normally single point is either at manufacturer, or import or sale to consumer. Little difficulty may arise in first two. But sale to consumer in series of sales may not be easy to determine. Further a dealer registered under the Act is empowered to recover an amount equivalent to the amount of sales tax under section 8-A(2)(b) from the person to whom the goods are sold. But if it is sold to a dealer who is also registered and purchase is made for resale, then obviously it is not sale to the consumer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g dealer, in such form and manner and within such period, as may be prescribed." Rule 12-A was also amended and various sub-rules were added to it. Earlier it was framed in pursuance of section 3-AA but the amended rule has been framed in pursuance of section 3-AAA as is clear from the section mentioned in the beginning of the rule. Section 3-AA and section 3-AAA are thus part of the same. They have to be read together. Former fixes point of taxability. Latter assumes every sale made by a dealer to a registered dealer to be a sale to the consumer unless the purchasing dealer purchases it (i) for resale, (ii) within the State or in the course of inter-State trade or commerce, (iii) in the same form and condition in which it was purchased. It incorporates a rule of presumption. What was provided earlier in the section itself, then by a sub-section has now been enacted in shape of independent section. Two things stand out clearly, one that presumption is not conclusive. It is rebuttable. Second it is more rigorous from mere proof of resale in the same condition, the requirement now is three fold. In order to rebut the presumption which otherwise arises by operation of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sale of any of the goods referred to in sub-rule (1) shall be deemed to be a sale to the consumer unless the selling dealer proves otherwise to the satisfaction of the assessing authority and for that purpose, also furnishes to the assessing authority a certificate in form III-A, duly filled in and signed by the purchasing dealer", and it was urged that presumption could arise only if the form was not furnished. And as the form required only two declarations to be mentioned the sales tax officer could not refuse to issue it under sub-rule (5). As discussed earlier the argument proceeds on complete misconception of the rule, the purpose for which it was framed and the objective it sought to achieve. Form III-A or rule 12-A do not stand on their own. They have been framed under section 24 of the Act to carry out objective of section 3-AAA. Read together there hardly remains any doubt that the goods which are purchased for resale in the same condition must be sold within the State or in inter-State trade or commerce. If they are sold in export then they are not covered in section 3-AAA and the presumption which arises cannot be said to have been rebutted. Form III-A appears to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionally than factually. It was under legal misapprehension. Before closing it may be mentioned that although in the order dated 3rd February forms were refused because purchases were for export but in the counter-affidavit to supplementary affidavit U.P. and inter-State sale was also admitted. To the extent the purchases are covered by it the petitioner is certainly entitled to the benefit of rule 12-A. In the result this petition fails in so far as quashing of order dated 3rd February, 1983, is concerned. The Sales Tax Officer shall issue forms in accordance with law in respect of those purchases which have been made for resale in the State or inter-State trade or commerce. There shall be no order as to costs. MEHROTRA, J.-The question raised in this petition is whether the petitioner, which is registered as a dealer under the U.P. as well as the Central Sales Tax Acts and sells dressed hides purchased from registered dealers within the State of U.P. is entitled to issuance of forms III-A for furnishing declaration under rule 12-A of the U.P. Sales Tax Rules or not. Sometime after the petitioner filed the present petition an order was passed by its assessing authority, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red dealer who does not purchase them for resale, within the State or in the course of inter-State trade or commerce, in the same form and condition in which he has purchased them, or (b) to any person other than a registered dealer, shall be deemed to be a sale to the consumer, unless the dealer proves otherwise to the satisfaction of the assessing authority and, for that purpose also furnishes to the assessing authority such declaration, obtained from the purchasing dealer, in such form and manner and within such period, as may be prescribed." Amongst the Rules framed under the U.P. Sales Tax Act is rule 12-A of which relevant portions are these: "Rule 12-A. Exemption of certain sales.-(1) A registered dealer who wishes to purchase any goods, liable to tax under sub-section (1) of section 3-A or section 3-AA at the point of sale to the consumer, without payment of tax shall furnish to the selling dealer a certificate in form III-A, duly filled in and signed by him. (2) A sale of any of the goods referred to in sub-rule (1) shall be deemed to be a sale to the consumer unless the selling dealer proves otherwise to the satisfaction of the assessing authority and, for that purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State or in the course of inter-State trade or commerce. If, however, a purchasing dealer had made purchases with a view to resell the goods in the same form and condition in which he had purchased them and not to consume them himself, which fact should be established by him by providing the necessary declaration in the prescribed form, he would be able to make the purchase without making payment of tax to the registered dealer from whom he had purchased the goods. The selling dealer would not be entitled to insist upon payment by the purchasing dealer of sales tax in such a situation. For, then, he would be able to tell his assessing authority that he had not made the sale to a consumer and was, therefore, not liable to pay tax on the transaction. Where as, in the instant case, the purchasing dealer was not buying the goods for consumption but was doing so for sale in the same form or condition he would be entitled to ask the selling dealer to let him have the goods without payment of sales tax, for, a transaction of sale, other than to a consumer, was not liable to tax and the selling dealer would not be able to require the purchasing dealer to pay the amount of sales tax on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are those of Lord Buckmaster in F.L. Smidth Co. v. Greenwood 8 TC 193 (HL) that: "It is important to remember the rule, which the courts ought to obey, that, when it is desired to impose a new burden by way of taxation, it is essential that this intention should be stated in plain terms. The courts cannot assent to the view that, if a section in a taxing statute is of doubtful and ambiguous meaning, it is possible out of that ambiguity to extract a new and added obligation not formerly cast upon the taxpayer." "The matter must," as observed by Lord Porter, in Indian Iron and Steel Co. Ltd. v. Commissioner of Income-tax [1943] 11 ITR 328 (PC) "depend upon the wording of the section, and not upon the consequences which follow". If the legislature thought that the sale to a consumer alone was to be taxed, and said so in unmistakable terms, it would be difficult to take the view that the transaction which, admittedly, is not one of sale to a consumer, should be brought to tax on the ground that it was not resale of the goods in the State itself or in the course of inter-State trade or commerce. The order passed by the assessing authority on 3rd February, 1983, in this case pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for the forms in respect of the transactions where he resells the goods in the same form and condition within the State or in the course of inter-State trade or commerce, he is entitled to the issuance thereof. I am in complete agreement with it but, with utmost respect to him, I find it difficult to subscribe to the view that the petitioner could not ask for issuance of forms III-A regarding purchases made by him of goods for resale in the same form and condition by way of export. The order dated 3rd February, 1983, in my opinion, deserves to be quashed. I would, therefore, allow the petition and quash it with the direction to the appropriate authority to reconsider forthwith the petitioner's claim for issuance of form III-A in accordance with law. I would also hold that the petitioner is entitled to costs. Order of reference (By the Court) In view of difference of opinion amongst us papers of this writ petition may be placed before Honourable the Chief justice for appropriate orders. (August 11, 12, 1983) SETH, J.-In view of difference of opinion between the learned judges constituting the Bench before which this petition for relief under article 226 of the Constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms III-A as in his opinion the concerned transactions entered into by the petitioner were by way of export of leather. As the petitioner neither effected sales in U.P. nor in the course of inter-State trade, it was not entitled to forms III-A. The petitioner then got his petition amended and prayed that as the reasons given by the Sales Tax Officer in his order dated 3rd February, 1983, rejecting its requests for forms were clearly untenable, the said order should also be quashed. In its rejoinder affidavit the petitioner refuted the case of the sales tax authorities that all the sales effected by it during the period relevant to the assessment years 1979-80 and 1980-81 were sales in the course of export and asserted that during that period it also had sold tanned leather/dressed hides within the State as well as in the course of inter-State trade. According to it the Sales Tax Officer was biased against it and the order dated 3rd February, 1983, deserved to be quashed for this reason as well. Both the learned judges before whom the petition came up for hearing held that the plea of bias raised on behalf of the petitioner was without any substance and the petitioner did not re-ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Sales Tax Act, 1956 (Act 74 of 1956), to be of special importance in inter-State trade or commerce shall not be liable to tax except at the point of sale by a dealer to the consumer, and the rate of tax shall be such, not exceeding the maximum rate for the time being specified in section 15 of the said Act, as the State Government may, by notification in the Gazette, declare. 3-AAA. Presumption regarding certain sales.-Where goods are liable to tax under this Act only at the point of sale to the consumer every sale by a dealer- (a) to a registered dealer who does not purchase them for resale, within the State or in the course of inter-State trade or commerce, in the same form and condition in which he has purchased them, or, (b) to any person other than a registered dealer, shall be deemed to be a sale to the consumer, unless the dealer proves otherwise to the satisfaction of the assessing authority and, for that purpose also furnishes to the assessing authority such declaration, obtained from the purchasing dealer, in such form and manner and within such period, as may be prescribed. 3-AAAA. Liability to Purchase tax on certain transactions.-Where any goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler to produce for inspection the portion of the certificate marked 'duplicate'. (3) A registered dealer, who wishes to obtain blank forms of certificate referred to in sub-rule (1), shall apply to the Sales Tax Officer within whose jurisdiction his principal place of business is situated. The application shall be signed by one of the persons mentioned in sub-rule (1) of rule 54 or by a person authorised under rule 77-A, as the case may be. (4) ..................... (5) If the Sales Tax Officer is satisfied that the requisition of the dealer for blank forms is genuine and reasonable, he may issue the same in such number as he deems fit. If the fee paid is more than the fee payable for the number of forms issued, the balance shall be credited to the account of the dealer to be adjusted against any future issue of the forms. (6) .............................. ................................... (22) .............................." Blank forms III-A prescribed by rule 12-A are issued to registered dealers, intending to purchase goods liable under the Act to tax at the point of sale to the consumer (hereinafter referred to as the goods), enabling him to make a declaratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner's selling dealers. Accordingly, as provided in rule 12-A(1) if the petitioner did not want to pay the tax to his selling dealer at that stage it became necessary for it to obtain forms III-A and to supply the same to its selling dealers. It is significant to note that form III-A merely requires a certificate from the purchaser that he has purchased the goods for sale in the same condition. It does not require the dealer to give a further certificate that the goods have been purchased for sale either within the State or in the course of inter-State trade or commerce. Accordingly, where a dealer purchased the goods either for sale outside the State or in the course of export, he can legitimately give the certificate contemplated by form III-A and there is no reason why the sale tax authority should refuse to issue form III-A to such a dealer. The learned standing counsel appearing for the department vehemently contended that sections 3-AA, 3-AAA and 3-AAAA should be read together and as forming part of one integrated scheme whereunder the legislature clearly intended that once the goods of the nature covered by section 3-AAA are sold in the State of U.P. they must, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proves it otherwise to the satisfaction of the assessing authority, the later will act on the basis that all sales of such goods as are liable under sections 3-A and 3-AA to tax at the point of sale to the consumer, except those effected to a registered dealer who purchased the same either for resale within the State or in the course of interState trade or commerce in the same form and condition in which he had purchased them, are sales made to consumers. The section postulates that it is open to selling dealer to satisfy and prove to the satisfaction of the assessing authority that a sale effected by him to a registered dealer who does not purchase the goods for resale within the State or in the course of inter-State trade or commerce has in fact been made to a person who is not a consumer, but then the burden of proving that the purchaser is not a consumer would be on the selling dealer who wants to have the turnover of such sale excluded from his taxable turnover and that for this purpose the dealer will also have to furnish to the assessing authority a declaration in form III-A from the purchasing dealer. In this view of the matter it is difficult to accept that section 3-AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... might take place, be subjected to tax under the Act at some stage or the other does not get defeated. I accordingly see no reason to give the restricted meaning to the word "consumer" as suggested by the learned standing counsel. As already mentioned, rule 12-A(5) obliges the Sales Tax Officer to issue blank forms III-A to a dealer if he is satisfied that the requisition made by him is genuine and reasonable. The Sales Tax Officer vide his order dated 3rd February, 1983, rejected the petitioner's application for forms merely for the reason that the petitioner was not entitled to the same as the transactions in respect of which he had requisitioned the forms were neither sales within the State nor sales in the course of inter-State trade or commerce, implying thereby that the petitioner's request was rejected as in the opinion of the Sales Tax Officer the transactions in respect of which the petitioner had made the requisition were in law to be treated as transactions of sales effected to a consumer. In view of the aforesaid discussion I am clearly of the opinion that this reason given by the Sales Tax Officer for rejecting the petitioner's application for forms III-A is not ten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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