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TMI Blog2013 (5) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of interest also within the meaning of Section 27 on the amount of 'due tax' assessed under Section 23 of the Delhi Sales Tax Act, 1975 and Rules framed thereunder in respect of those goods from the date of submission of return itself?" 2. The petitioner was assessed to sales tax by the Assessing Authority for the assessment year 1984-85 under the Delhi Sales Tax Act, 1975 (hereinafter also referred to as 'the Act'). The Assessing Authority made a demand of Rs. 1,98,590/- including interest in the sum of Rs. 85,053/-. The above demand was raised on the ground that nine ST-1 Forms submitted by the petitioner were held to be invalid as an inquiry had revealed that the said forms were issued by the purchasing dealer who did not hold a registration certificate in respect of the goods sold by the petitioner. The petitioner who is a dealer in electronic goods had declared sales of Rs. 11,30,478/- against the said nine ST-1 Forms furnished by one M/s New Standard Foam Manufacturing Company who was a registered dealer albeit with respect to hosiery goods only and did not hold a registration certificate with respect to electronic goods. The Assessing Authority thus did not allow deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained the verification by the purchasing dealer that the statement made in the Forms was true to the best of his knowledge and belief. It is contended on behalf of the petitioner that once the ST-1 Forms had been issued by a registered dealer, it was not incumbent upon the selling dealer to make any further inquiry and the seller was entitled to rely on the declaration made by the purchasing dealer in the ST-1 Form that the purchasing dealer held a registration certificate in respect of the goods sought to be transacted. The counsel for the petitioner has also drawn our attention to Section 50(1)(d) of the Act which provides that whoever, being a registered dealer, falsely represents, while purchasing any goods that such goods are covered by a certificate of registration, is liable to be punished with rigorous imprisonment for a term which may extend to six months or with a fine or with both. It has thus been contended on behalf of the petitioner that the authorities would have, in cases of false declarations by the purchasing dealer, recourse to recover penalty from the offending dealer and that would compensate any loss of revenue that may have resulted on account of the fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice, if any, refunded by the dealer to a purchaser in respect of any goods purchased and returned by the purchaser within the prescribed period: Provided that an election as aforesaid once made shall not be altered except with the permission of the Commissioner and on such terms and conditions as he may think fit to impose." 8. Sub-section (2) of Section 4 of the Act provides for certain deductions from the dealer's turnover to arrive at the "taxable turnover" for the purposes of the Act. Section 4(2)(a)(v) of the Act provides for excluding certain sales made by a registered dealer to another registered dealer from the "taxable turnover" of the selling dealer. Section 4(2)(a)(v) of the Act is quoted below :- "4. Rate of Tax - (1) xxxx xxxx xxxx xxxx xxxx (2) For the purposes of this Act, "taxable turnover" means that part of a dealer's turnover during the prescribed period in any year which remains after deducting therefrom,-- (a) his turnover during that period on - xxxx xxxx xxxx xxxx xxxx (v) sale to a registered dealer- (A) of goods of the class or classes specified in the certificate of registration of such dealer, as being intended for use by him as raw materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST-1 duly filled in and signed by the purchasing dealer or a person authorized by him in writing: Provided that no single declaration in Form ST-1 shall cover more than one transaction of sale except in cases where the total amount of sales made in a year covered by one declaration is equal to or less than Rs. 50,00,000/- or such other amount as the Commissioner may, from time to time, specify in this behalf in the Official Gazette: Provided further that where, in the case of any transaction of sales, the delivery of goods is spread over different years it shall be necessary to furnish a separate declaration in respect of goods as delivered in each year." 11. Rule 8 of the Rules mandates that the declaration referred to in the second proviso to clause 4(2)(a) of the Act should be in 'Form ST-1' which would be printed under the Authority of the Commissioner and could be obtained from the appropriate Assessing Authority by the registered dealer intending to purchase goods on the strength of his certificate of registration. The relevant portions of Rule 8 of the Rules are quoted below:- "8. Authority from whom the declaration form may be obtained, and use, custody and maintenance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion forms has, at the time of making application- (i) defaulted in furnishing any return or returns in accordance with the provisions of the Act or these rules, or in payment of tax due according to such return or returns; or (ii) defaulted in making the payment of the amount of tax assessed or penalty imposed by assessing authority, in respect of which no orders for instalments/stay have been obtained from the competent authority under the provisions of law; or (iia) not filed proper Requisition Account of the declaration forms required by him; or (iib) not filed proper utilization account in Form ST-2B of forms issued to him in advance together with the returns for the period during which the form were utilized; or (iii) been found by an appropriate assessing authority having some adverse material against him, suggesting any concealment of sale or purchase or of furnishing inaccurate particulars in the returns, the appropriate assessing authority shall, after affording the applicant an opportunity of being heard, withhold, for reasons to be recorded in writing, the issue of declaration forms to him and the appropriate assessing authority shall make a report to the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Forms are printed under the Authority of the Commissioner and are issued by the Assessing Authority of the purchasing dealer on an application made to him by the purchasing dealer. An application for issuance of forms may also be rejected by the Assessing Officer, if the Assessing Officer is satisfied that the declaration forms have not been used bonafide or if the conditions in sub-rule (4) of Rule 8 of the Rules are not satisfied. Further, the declarations made in the ST Forms are unequivocal and the purchaser is liable to be subjected to punitive action if the same are found to be untrue. Thus, in the normal course, there would be no reason for the selling dealer to doubt the declaration made by the purchasing dealer, in the Form ST-1. In the present case too, the petitioner has relied upon such Forms and there is no material on record to suggest that the petitioner accepted the ST-1 Forms with the knowledge that the declarations made thereunder by the purchasing dealer were wrong. We are, thus, unable to agree with the view that there was any "willful omission" on the part of the petitioner in making his return or that the return was made by the petitioner knowing that the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his return to submit a revised return in the prescribed manner before the time prescribed for the submission of the next return but not later. 6. Now Section 7(2) says that every 'such' return, meaning thereby the return referred to in Section 7(1), shall be accompanied by a receipt showing the deposit of the full amount of tax due "on the basis of the return". In other words the dealer is required to pay the full amount of tax that becomes due on the basis of the particulars in regard to the turnover and taxable turnover disclosed in the return. Sub-section (2-A) begins with a non obstante clause, namely, notwithstanding anything contained in sub-section (2), and provides that any dealer or class of dealers specified in the notification may pay the tax at intervals shorter than those prescribed under sub-section (1), in which case the tax shall be deposited at the intervals specified in the notification in advance of the return and the return shall be accompanied by the receipt for the full amount of tax due "shown in the return". Although the phraseology used in sub-sections (2) and (2-A) of Section 7 is not the same, the content and purport of the two subsections is more or l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h dealers who failed to supply some information under the "bona fide" belief that the same was not necessary or those who had failed to pay the full tax due not with a view to evading or avoiding the liability to pay the tax but because they bona fide believed that they were liable to pay the tax assessed by them on the basis of the return and no more. If at a later date on the basis of a different interpretation put on the language of the relevant provisions of the law, the dealer becomes liable to pay tax in excess of that already paid, he may be called upon to make good the difference but he cannot be visited with penalty under Section 7-AA unless it is shown that the dealer had withheld payment of the differential tax by wilfully withholding material information or had acted without reasonable cause in committing the default....." (underlining added) 16. Following the aforesaid judgment, it cannot be held that the petitioner was guilty of wilful omission in filing his return on the basis of the ST-1 Form which was duly furnished to him by the purchasing dealer. Thus, in our view the answer to the first question whether the petitioner is guilty of willful omission must be answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made against such forms subsequently found to be inaccurate, the petitioner would also be entitled to deduct the sales made against ST-1 Forms without any further enquiry. 19. We are unable to agree with this contention. In our view the reliance placed by petitioner on the decision of the Supreme Court in the case of Radio and Electricals Ltd (supra) also does not further the case of the petitioner. First of all, it has been clearly held by the Supreme Court in the case of Radio and Electricals Ltd (supra) that it would be the duty of the selling dealer to verify that the purchasing dealer is (a) a registered dealer and (b) holds a registration certificate in respect of the goods sold to him. Once a selling dealer has complied with the same, his duty does not extend any further. Before a registered dealer can accept the declaration made by the purchasing dealer, he must satisfy himself that the declaration is true in so far as the purchasing dealer does hold a certificate of registration in respect of the goods which are being transacted. Secondly, misapplication of goods which the purchasing dealer may be guilty of obviously takes place after the forms have been submitted and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third proviso to section 4(2) of the Act makes an express provision for collecting tax from the purchaser, in the event goods are purchased by him for the purposes mentioned in Section 4(2)(a)(v) of the Act but are not so utilized by him. Thus, whereas in the case of misutilization of goods by the purchaser, the amount of tax payable can be collected from the purchaser, there is no such provision in the Act which enables collection of tax from the purchaser, in the event, he makes a false declaration regarding holding of registration certificate with respect to the goods so purchased. 21. We also are unable to agree with the contention of the petitioner that the interest of the revenue can be protected by the imposition of penalty for offence of misrepresentation under Section 50(1)(d) of the Act. The provision to take punitive action and impose penalty cannot be equated to collecting the tax payable. Imposition of penalty is only a punitive measure to ensure that there is compliance with the law and persons not complying with provisions of the statute are proceeded against. Penalty provisions are a part of the machinery to ensure compliance for collection of tax levied and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired by sub-section (3) of section 21, he shall, in addition to the tax (including any penalty) due, be liable of pay simple interest on the amount so due at one per cent per month from the date immediately following the last date for the submission of the return under sub-section (2) of the said section for a period of one month, and at one and a half per cent per month thereafter for so long as he continues to make default in such payment or till the date of completion of assessment under section 23, whichever is earlier. (2) When a dealer or a person is in default or is deemed to be in default in making the payment of tax, he shall, in addition to the amounts payable under section 23 or section 24, be liable to pay simple interest on such amount at one per cent per month from the date of such default for a period of one month, and at one and a half per cent per month thereafter for so long as he continues to make default in the payment of the said amount. xxxxx xxxxx xxxxx xxxxx xxxxx" 26. It is trite law that the fiscal statutes must be interpreted as per the plain language of the statute. In the oft-quoted words of Rowlatt, J., in Cape Brandy Syndicate v. Inland Revenue C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (See Whitney v. IRC, CIT v. Mahaliram Ramjidas, India United Mills Ltd. v. Commissioner of Excess Profits Tax, Bombay and Gursahai Saigal v. CIT, Punjab). But it must also be realised that provision by which the authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount. (See Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji and Union of India v. A.L. Rallia Ram). Our attention was, however, drawn by Mr. Sen to two cases. Even in those cases, C.I.T. v. M. Chandra Sekhar and Central Provinces Manganese Ore Co. Ltd. v. C.I.T., all that the Court pointed out was that provision for charging interest was, it seems, introduced in order to compensate for the loss occasioned to the Revenue due to delay. But then interest was charged on the strength of a statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1), (2) and (2A) and 11B of the Act leaves no room for doubt that the expression 'tax payable' in Section 11B can only mean the full amount of tax which becomes due under Sub-sections (2) and (2A), of the Act when assessed on the basis of the information regarding turnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under Section 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' to visit him with the liability to pay interest under Clause (a) of Section 11-B. It would be a different matter if the return is not approved by the authority but that is not the case here. It is difficult on the plain language of the section to hold that the law envisages the assessee to predicate the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible. xxxxx xxxxx xxxxx xxxxx 19. In the result we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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