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TMI Blog1984 (12) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... 31st October, 1970 on 5th May, 1971. Thereafter, it came to the notice of the Sales Tax Officer that sales amounting to Rs. 83,306 made by Kamala Mills Ltd. to the respondent during the said period of assessment were allowed as casual sales in the assessment of Kamala Mills Ltd. In the aforesaid order of assessment, passed under section 33, in the case of the respondent these purchases of Rs. 83,306 had been treated as purchases from a registered dealer and the corresponding sales were allowed as resales not liable to tax. Merely on this material, the Sales Tax Officer came to the conclusion that as the said sales of Rs. 83,306 were of yarn and as Kamala Mills Ltd. was not a dealer in yarn as revealed in the assessment record of that dealer, the respondent was not entitled to claim that the purchases of Rs. 83,306 made from Kamala Mills Ltd. were from a registered dealer and he held that it was necessary to disallow corresponding resale claim which had been erroneously allowed in the original assessment order under section 33 passed against the assessee. It may be mentioned here that it is quite clear the only material on which the Sales Tax Officer proceeded is that in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then shifted on the department and the department had failed to discharge the burden. This reasoning has not been expressly given by the Tribunal in the judgment in the present case. But the facts found show that at the hearing of the appeal in the present case before the Tribunal, the Sales Tax Officer (Legal) appearing on behalf of the applicant before us stated that he merely adopted all the arguments which had been advanced on behalf of the department in the case of Messrs. B. Hasmukhlal Co. v. State of Maharashtra, and the Tribunal found, as a fact, that the facts in the case of Messrs. B. Hasmukhlal Co. were on all fours with the facts in the present case. This statement is contained in the statement of case which has been forwarded with the approval of the parties, and hence, even if there is a slight discrepancy in the same, it would be but proper to proceed on the basis of it being correct. Moreover, it is not disputed that, in the present case also, all that was pointed out by the Sales Tax Officer to the respondent was that in the case of Kamala Mills Ltd. the said sales were held to be casual sales. The reasoning of the Tribunal which we have stated above has been exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and". Under clause (25) of section 2, a "registered dealer" merely means a dealer registered under section 22. The form of a registration certificate entitled is set out in form 2 annexed to the Bombay Sales Tax Rules, 1959. The said certificate inter alia specifies that the dealer to whom the certificate is issued deals in particular classes of goods and the classes of goods dealt with are set out by their generic description. The application for registration has to be made in form 1 annexed to these Rules which contains a requirement at item 9 that the dealer has to state by general description the classes of goods in which he deals. Section 12A as it stood at the relevant time read as follows: "There shall not be deducted from the turnover of sales, the resales of goods purchased by a dealer after the commencement of the Bombay Sales Tax (Amendment) Act, 1965, from a registered dealer, as provided in sections 7, 8, 9 and 10, unless the dealer claiming deduction produces a bill or cash memorandum containing a certificate that the registration certificate of the selling dealer was in force on the date of sale of the goods to him. Such certificate shall be signed by the sellin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on business in some commodity and he disposes of for a price articles discarded, surplus or unserviceable. It was held that where a company carrying on the business of manufacturing and selling cotton textiles disposes of miscellaneous old and discarded items such as stores, machinery, iron scrap, cans and so on, it cannot be said to carry on the business of selling these items of goods. 5.. Mr. Jetly placed strong reliance on the aforesaid decision of a Division Bench of this Court in Impex (India) Ltd. v. State of Maharashtra [1976] 37 STC 249. In that case, it was held that under the Bombay Sales Tax Act, 1959, what is to be taxed are sales and purchases made by a dealer in the course of his business of buying or selling goods, and not sales or purchases of any goods by a dealer even though he may not be carrying on business in that particular class of goods. A dealer is, therefore, registered in respect of a particular business of buying or selling goods, and not generally. Therefore, there can be no claim for deduction under clause (ii) of section 8 of the Act unless the goods which have been resold are purchased from a registered dealer who is dealing in that very class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased by the respondent from a registered dealer by producing the certificates as aforesaid. In view of this, it was for the department to lead cogent evidence to show that the sales of the aforesaid yarn were not effected by Kamala Mills Ltd. in the course of their business and by merely relying on the assessment order of Kamala Mills Ltd. for the relevant period wherein a finding was given that the said sales of yarn to the respondent were causal sales, the department could not possibly be held to have discharged that burden. 8.. The finding that the said sales by Kamala Mills Ltd. were casual sales, it may be pointed out, was arrived at admittedly in proceedings to which the respondent was not a party and without any notice to the respondent. Such a finding might be conclusive as between the department and Kamala Mills Ltd., but it could not be used as evidence against the respondent in a proceeding between the respondent-assessee and the department and by merely producing that finding the department can in no way be held to have discharged the burden which lay on the department. The submission of Mr. Surte is, therefore, correct and the question referred to us must be answe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate was a registered dealer and his registration certificate was in force, if the purchasing dealer resold the goods purchased under the certificates, he would be entitled to the deduction contemplated under section 8(ii). It is possible, as contended by Mr. Jetly that a situation might arise where such a certificate is issued by a registered dealer even in respect of sales which were casual sales made by him, and there might be a complication and a situation might arise in which the purchasing dealer might get a deduction under section 8(ii) and the department might be unable to take action against the registered dealer issuing the certificate for having issued a false certificate either under section 63(1)(f) or under section 36(2)(b). It was urged by him that in view of this, it must be held that, in spite of a certificate being produced in order to obtain the deduction as contemplated under section 8(ii), the dealer claiming it must prove that the sales in question were effected by the selling dealer in the course of his business as a registered dealer. In our view, this submission is not sustainable. The plain language of sub-section (ii) shows that once a certificate is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm prescribed under rule 53 as required by section 12A and section 8(ii), he is entitled to the deduction allowable under section 8(ii), unless it turns out that the certificate is bogus or was issued by a person who was not a registered dealer at all or by a dealer whose registration had come to an end or the certificate was obtained by fraud or conclusion to which the dealer claiming the deduction was a party. This appears to be the position at the relevant time. We may, however, make it clear that in view of what we have decided earlier regarding the finding that the sales effected by Kamala Mills Ltd. were casual sales having been arrived at without notice to the respondent and in violation of rules of natural justice, the rest of the observations in our judgment should not be treated as concluding the question regarding the construction of sub-section (ii) of section 8. Mr. Jetly has submitted that, in view of what we have observed regarding the construction and legal effect of section 8(ii) read with section 12A of the said Act, we must also consider the questions as to whether a certificate issued at the relevant time under section 12A and in form 53 contained an implicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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