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TMI Blog1993 (10) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1969-70. The Food Corporation of India, which is the assessee, is a Corporation established by the Central Government under section 3 of the Food Corporation Act, 1964. It is engaged in purchase and sale of foodgrains and fertilizers and is a registered dealer under the provisions of the Bihar Sales Tax Act, 1959 (hereinafter for brevity the Act only). 3.. The basic facts, as found by the Tribunal, are being noticed hereunder. The assessee had purchased fertilizers worth Rs. 34,19,997.92 from M/s. Fertilizer Corporation of India and it sold the same for Rs. 36,59,570.92. During the course of assessment proceedings, the assessing officer on examination of book of accounts and verification of purchase invoices, having been fully satisfied that the assessee had paid tax on purchase of fertilizers to the selling dealer, except for a sum of Rs. 2,39,573.00, allowed deduction of Rs. 34,19,997.92 from the gross turnover. The assessee being aggrieved by part disallowance, went in appeal before the Deputy Commissioner, who instead of granting any relief, reversed the order of the assessing officer on the ground that since the petitioner had not furnished declarations in form IXC du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o who in fact will be deemed to be the first seller in the State of Bihar in respect of rice procured under the provisions of the procurement order and has directed that if the State Government has already been subjected to tax liability in respect of the transactions, then the assessee cannot be again made liable to pay tax in respect of such transactions, in my opinion, it is neither necessary nor permissible to examine the legal aspects touching upon the strict liability by examining and considering the provisions of the Act. In my opinion, since it has been found as a fact by the Tribunal that the fair price shop dealers have already deposited Rs. 3.33 per quintal as sales tax in the treasury in respect of each and every transaction, the Commercial Taxes Department should have felt satisfied with appropriation of the said amount deposited in its own account without unnecessarily quarrelling on the question of liability. It was so advisable because in respect of a particular transaction it could have recovered the tax only at one point and it was wholly immaterial whether the amount of sales tax deposited by the fairprice shop dealers should be treated as the liability of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. 8.. The learned counsels have relied upon various decisions in support of their submissions with which I will be dealing hereinafter but before further proceeding to examine the submissions made at the Bar it will be worthwhile to quote the relevant provisions having bearing on the question referred. Section 2(s) tax includes the general sales tax and special sales tax as also the purchase tax levied under section 3. Section 3: Charge of tax.-(1) Subject to the provisions of this Act, both general sales tax and special sales tax as also purchase tax shall be paid by every dealer- (a) with effect from the date of commencement of Bihar Finance Act, 1966, if his gross turnover during a period not exceeding twelve months immediately preceding the said date exceeded Rs. 15,000; (b) to whom clause (a) does not apply, with effect from the expiry of thirty days from the date on which his gross turnover during a period not exceeding twelve months immediately preceding such date first exceeded Rs. 15,000. Section 4: Exemption.-(1) No tax shall be payable under this Act on sales or purchases of goods which have taken place- (a) in the course of inter-State trade or comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or description of goods or such sales, category or description of sales as may be specified in the notification. (2) The special sales tax payable by a dealer under section 3 shall be levied at the rate of 4 per centum of his taxable turnover: Provided that the State Government may, from time to time, by notification and subject to such conditions and restrictions as it may impose, fix a higher rate not exceeding 15 per centum or any lower rate not below 2 per centum in respect of such class of dealers or such goods, class or description of goods or such sales, category or description of sales as may be specified in the notification. (2A) The purchase tax payable by a dealer under section 3 on goods declared under section 3A shall be levied at the rate of 5 per centum of his taxable turnover of purchases: Provided that the State Government may, from time to time by notification, and subject to such conditions and restrictions as it may impose, fix a higher rate not exceeding 15 per centum, or any lower rate not below 1 per centum in respect of such class of dealers or such goods or such purchases as may be specified in the notification. (3) Notwithstanding anything cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, by notification, impose in this behalf: Rule 8(2) of the Bihar Sales Tax Rules, 1959 reads as under: A dealer who claims that any amount of his turnover should be exempted from special sales tax on account of the goods having been subjected to such tax in accordance with a notification issued by the State Government under the proviso to section 5, shall substantiate such claim before the authority prescribed in rule 12, by producing the purchase orders, if any, the original copy of the cash memoranda or bills issued to him and a true declaration in writing from the selling dealer (or his manager declared under section 10 in writing) in form IXC obtained from the prescribed authority, that the goods in question have already been subjected to special sales tax. Notification No. STGL-RT-9/65-12919-F.T., dated 11th November, 1966 as amended by STGL-AR-1006-68-8548-F.T., dated 10th September, 1968 so far as it relates to fertilizers reads as under: In exercise of the powers conferred by the proviso to section 5 of the Bihar Sales Tax Act, 1959 (Bihar Act XIX of 1959), and in supersession of all the previous notifications on the subject, the Governor of Bihar is pleased to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry dealer liable to pay sales tax, both general and special, in accordance with the provisions of the Act. The levy of special sales tax is governed by section 5 and section 6(2). Section 5 provides for the point in the series of sales of specified goods at which the special sales tax is to be levied and section 6(2) deals with the rate of such tax. In this case, we are concerned with the question of determining the point or points at which the special sales tax is permissible to be levied. In substance, we have been called upon to determine the taxable event or events showering tax liability on certain class of dealers who can be termed as taxable persons. 10.. In section 5 of the Act, the Legislature has plainly pronounced that the special sales tax shall be levied only at one point in the series of sale of the goods. The Legislature has identified the point being at which the goods are sold to a person other than the category of registered dealer referred to therein. But the proviso has enabled the State Government to specify any other point for levy of special sales tax in respect of any goods or class or description of goods or any class of dealers subject to such conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of each of the selling dealer will form part of his taxable turnover. Thus, so far as the general sales tax is concerned, it is multipoint in nature, if viewed from sale aspect of specified goods, but this is not the situation in relation to special sales tax or purchase tax. These taxes can be levied only against one dealer in relation to same the goods, even if the goods are subjected to multi-point intra-State sales. 12.. Now let me deal with the notification dated November 11, 1966 read with notification dated September 10, 1968 which is relevant for the present purpose, though a notification in similar terms dated March 31, 1974 had also been issued by the State Government possibly because of the substitution of section 5 by Bihar Act 11 of 1973. Column (3) of the Schedule to the notification provides the stage at which the special sales tax shall be levied. Column (4) of the said Schedule lays down the conditions and restrictions subject to which exemption from special sales tax shall be allowed at subsequent stages. Column (3) makes the levy first point as commonly understood and it is quite consistent with the authority delegated to State Government under the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as to whether the dealer under the assessment is a first seller or a second or subsequent seller. If the dealer is able to convince and prove on the basis of any acceptable evidence that the sale in hand is second or subsequent sale, then, he has got to be exonerated from the tax liability because taxable event in relation to such goods had already passed. Keeping in view the discussions made hereinbefore it has to be held that the conditions laid down under column (4) of the Schedule to the notification dated September 10, 1968, referred to above, are merely directory in nature and strict non-compliance thereof per se cannot be a ground for not accepting the claim of deduction of the concerned dealer. I may clarify that even if the provisions are not mandatory, the deductions cannot be allowed to the dealer unless he satisfied that he had purchased the goods from a dealer registered under the Act. 16.. So far as the rule 8(2) of the Bihar Sales Tax Rules, 1959 is concerned, it being almost in the same terms as contained under column (4) of the Schedule to the notification dated September 10, 1968, referred to above and for the reasons, as set out above, I can conveniently hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be deducted, subject to such conditions and restrictions as the State Government may, by notification, impose in this behalf; 20.. In my opinion, the provision in question does not in any way improve the stand point of the State for more than one reason. Firstly, no notification in terms of the said provision has been issued by the State Government and as such the said provision is of no consequence in the present case. Secondly, section 7 merely provides a mode of computation of taxable turnover and is, therefore, in the nature of a machinery section. Such provision has to be read in the light of the statutory scheme and the charging section which are always strictly construed. In case of conflict, the charging section has to prevail, and if necessary, the machinery section has to suffer violence to its language to accommodate the contemplation under the charging section. Therefore, in my opinion, it is not necessary to deal with the section in any further detail. 21.. Now let me deal with the precedents cited at the bar. In the case of the State of Orissa v. M.A. Tulloch and Co. Ltd. reported in [1964] 15 STC 641, the question which fell for consideration before the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the furnishing of declaration forms issued by the purchasing dealer was a condition for claiming exemption thereunder. Dealing with the question their Lordships held (at page 610) that: Section 5(2)(a)(ii) of the Act in effect exempts a specified turnover of a dealer from sales tax. The provision prescribing the exemption shall, therefore, be strictly construed. The substantive clause gives the exemption and the proviso qualifies the substantive clause. In effect the proviso says that that part of the turnover of the selling dealer covered by the terms of sub-clause (ii) will be exempted provided a declaration in the form prescribed is furnished. To put it in other words, a dealer cannot get the exemption unless he furnishes the declaration in the prescribed form. It was primarily for the aforesaid reason that their Lordships have held the provisions to be mandatory. Their Lordships distinguished their earlier decision in the case of State of Orissa [1964] 15 STC 641 (SC), by holding that section 5(2)(a)(ii) of the Orissa Act did not contain any provision similar to one at hand. It was noticed that in the Orissa case the Rules were held to be directory in order to reconcile th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide certain conditions for grant of exemption at the subsequent stage. As discussed above, the conditions are wholly immaterial for determining the point of levy and, therefore, the conditions so laid down can be conveniently read as directory because such a reading will not in any way adversely affect the interest of the revenue and what is more important is that this course will make the provisions under the notification consistent with the provisions under section 5 of the Act. In all such cases the dealer is required to satisfy the assessing officer that he has purchased the goods from a registered dealer who is liable to pay tax under the Act, which has been duly done in the present case. I may incidentally indicate here that one of the dependable modes for ascertaining the said fact can be as to whether the payment to the selling dealer has been made by crossed cheque or crossed bank draft as mandatorily required under section 40A(3) of the Income-tax Act, 1961. The word expenditure under the said section includes price paid for purchases of stock-in-trade as held even by this Court in the case of Commissioner of Income-tax v. Ram Chand Gobind Prasad reported in [1985] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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