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TMI Blog2015 (11) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... using the authorisation under Form ST-37A as it turned out that the amended Forms were issued only with effect from 27th June 2000. Therefore, even if the Assessees had approached their ward authorities to get the Form ST-8 in its amended version (which had replaced Form ST-37A) such amended Forms would in fact have not been available. There was not even any press note, circular or notification issued to the dealers about the availability of such amended ST-8 Forms. This was not a case of making a false declaration. The Appellants were issued Form ST-35 and ST-35/1 and declarations were given in both forms, which at the time of making of these declarations, could not be held to be false declarations. Another decision which is relevant in this context is MMTC v. State of Orissa [1986 (1) TMI 377 - ORISSA HIGH COURT] where again it was observed that when the Form is not amended by the time of furnishing the declaration it was impossible on the part of the Assessee to furnish a declaration in the amended Form. - Clause 7A refers to Rule 23A(2) which provides that where a dealer purchases goods on the strength of the registration certificate issued under Rule 16 and against Form ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing authority. Secondly, the statutory requirement of recording the formation of an opinion about turnover escaping assessment by the tax by the assessing authority is mandatory. Thirdly, the question whether there was ground for reopening the assessment is not a matter for inference reference. There is a mandatory requirement that there must be a written note on the file by the assessing authority recording satisfaction that there existed grounds for reopening the assessment within the meaning of Section 24 of the DST Act. This again cannot be a mechanical reproduction of the provision. If there is no such recording of satisfaction by the assessing authority, the inevitable result is invalidation of the entire reassessment proceedings. - Decided in favour of assessee, - ST.APPL. 1/2013, ST.APPL. 3/2013, ST.APPL. 4/2013, ST.APPL. 5/2013, ST.APPL. 6/2013, ST.APPL. 17/2013, ST.APPL. 18/2013 - - - Dated:- 24-11-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr. Rajesh Jain, Ms. Renu Sehgal, Mr.N.K. Bhuraria, Mr. Virag Tiwari and Mr. Kumarjee Bhatt, Advocates For the Respondent : Mr. Satyakam, Additional Standing counsel JUDGMENT Dr. S. Mura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi; (iv) in the case of a registered dealer who purchased the first point goods on the declaration of Form ST-35, which has been referred to in Clause (xvii) of Rule 11 of the Delhi Sales Tax Rules, 1975 ( DST Rules ) for any of the purposes mentioned in sub-clause 1 of Clause 17 but are not so utilised by him, when any such dealer sells any such goods for the first time in Delhi and (v) in the case of dealers who are stockists/sole selling agents, distributors of first point sellers, i.e., manufacturers or importers ( extended first point sellers ) when they sell the goods for the first time in Delhi when purchased on the strength of ST-35/1 (Refer to sub-clause [XXXIVA] of Rule11 of the DST Rules). 6. For grant of the authorisation in Form ST-37 an application in Form ST-36 has to be filed for purchasing first point goods against Form ST-35. 7. Till 30th September 1999, the legal position was that on the strength of the authorisation certificate in Form ST-37, the first point goods could be purchased by the authorised dealer when intended: (i) for use as a raw material in the manufacture in Delhi of goods (other than goods specified in the Third Schedule t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. 12. It requires to be noticed at this stage that Section 14 DST Act provides for registration of dealers. Section 14(1) states that no dealer can carry on business as such unless he is registered and possesses a certificate of registration. In terms of the second proviso, goods notified to be first point goods under Section 5(A)(1) are not to be specified in the registration certificate. A registration certificate itself is issued in Form ST-8. 13. The other fact to be noticed is that it is not as if a dealer can himself simply print the forms namely ST-37 or ST-37A (the authorisation forms) or the declarations in Form ST-35 or ST-35/1. There is a procedure specified under the DST Rules for this purpose. Rule 8 of the DST Rules provides for the authority from whom the declaration form will be obtained. It also provides for the use, custody, maintenance of such records and the matters incidental thereto. The forms have a serial number and can be issued only by an appropriate assessing authority for which a request has to be made by the dealer in terms of Rule 8A. Rule 8 of the DST Rules reads as under: 8. Every registered dealer shall maintain a register in Form ST-2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India or (c) for use in manufacture of goods for sale outside Delhi. 16. In the case goods sold for a purpose other than for sale in Delhi then the purchase price of such goods was liable to be included in the taxable turnover of the purchasing dealer. 17. However, this gave rise to an anomaly inasmuch as although the amended rule including the new Form ST-35/1 was notified by publication in the gazette, the earlier registration certificate in ST-8 or the authorisation certificate in ST-37 and ST-37A which were issued to registered dealers, authorised purchasing dealers and extended first point sellers were neither withdrawn nor rendered inoperative either by the said notification dated 30th September 1999 or any other notification. The fact of the matter was that the sales tax department continued to treat the said registration as valid and continued to issue Forms ST-1, ST-35 and ST-35/1 on the basis of Forms ST-8, ST-37 and ST-37A in the unamended versions even after 30 th September 1999. 18. At this stage it requires to be noticed that Rule 2(g) of the DST Rules defines form to mean a form appended to these Rules which includes Rule 8. The fact of the matter was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to ₹ 69,42,753 thus attracting the second proviso to Rule 11(XXXIVA) since it was found that the goods were sold in course of inter-state trade and commerce. The assessing authority further levied interests in the sum of ₹ 4,99,878 and penalty of ₹ 5,55,420. The total demand created was ₹ 16,10,723. Orders in Appeal 24. Aggrieved by the above order of reassessment, CEC filed an appeal before the Additional Commissioner who by an order dated 2nd June 2009 confirmed the reassessment order dated 19th March 2007. 25. Thereafter an appeal being ST Appeal No. 104/ATVAT/09-10 was filed before the Tribunal. There were three Members of the Tribunal i.e. Mr. S.K. Kaushik, Chairman, Mr. D.C. Anand, Member (Judicial) and Ms. Nita Bali, Member (Accounts). While the majority, comprising of Mr. Anand and Ms. Bali by order dated 19th September 2012, confirmed the order of the Additional Commissioner both in respect of the legality of the reassessment as well as in respect of the merits of the case, the dissenting Member Mr. S.K. Kaushik (Chairman) relied on the decision of the Supreme Court in Polestar Electronics (P) Ltd. v. Additional Commissioner of Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealers had to necessarily use the unamended form that was issued by the department and could not have added or subtracted anything in the said Form. The declarations given by them in the old Forms could not therefore be said to be false declarations. Reliance was also placed on the decision in Ramesh Chawla v. Commissioner of Sales Tax, Delhi 132 STC 1 (SC). (ii) Even assuming that by reason of the amendment to Rule 11 (XXXIV) and (XXXIVA) the corresponding Form ST-35 and ST-35/1 should be deemed to have been amended, the consequence was only that the selling dealers would be disentitled to the exemption since the declaration was not in the prescribed form. The consequence could not be that the price of the goods purchased would be included in their taxable turnover. The fact that the substituted forms were never printed was confirmed by the letter dated 22nd December 2009 issued by the Additional Commissioner of Sales Tax under the RTI Act. (iii) Even the newly printed registration certificates under ST-8 were issued to the assessing authority only with effect from 25th June 2009 i.e. after nine months from when the amendment was carried out to Rule 11 (XXXIVA). Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registration certificate was in the form which was prior to 29th September 1973. There was no requirement in terms of the said registration form that the resale of goods or use of such goods as raw materials should be within Delhi. That requirement was brought in by an amendment with effect from 29th March 1973. 31.3 One part of the decision in Polestar Electronics (P) Ltd. (supra) concerned the interpretation of the word resale under the second proviso to Section 5(2)(a)(ii) of the Bengal Act as amended by Finance Act, 1972. It was held that the plain meaning of the word resale cannot mean resale that is restricted to the territory of Delhi. It was held that there was no geographical limitation confining resale, manufacture or sale to the territory of Delhi. Further, it was held that the burden of proof that the goods purchased were utilised by the purchasing dealer for a different purpose would be on the Revenue and that if the Revenue wanted to add the price of the goods purchased in the taxable turnover of the purchasing dealer it would be for the Revenue to show that, in a given case, the goods were utilised by the purchasing dealer for a different purpose, i.e., af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assume for the purpose of argument that since the words in the Union Territory of Delhi and inside Delhi were added after manufacture and sale respectively in section 5(2)(a)(ii), a similar amendment may also be taken to have been effected in the second proviso and we may read there the words in the Union Territory of Delhi after the word manufacture and the words inside Delhi after the word sale . What the second proviso, on this construction postulates is that the goods must be purchased by the purchasing dealer as being intended for use by him as raw materials in the manufacture in the territory of Delhi of goods for sale inside Delhi . But the declarations given by the assesses being in the unamended form, it would not be possible to say that the goods were purchased by the assesses as being intended for use as raw materials in the manufacture in the territory of Delhi of goods for sale inside Delhi. The condition for the applicability of the second proviso was, therefore, clearly not satisfied and the second proviso could not be invoked for including the price of the goods purchased in the taxable turnover of the assesses.... 31.6. In Polestar Electro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Forms. It is not as if a dealer can simply print out a form and begin using it. The assessing authority has to be satisfied that the purchasing dealer is entitled to such a Form. The Forms are maintained in serial numbers and the assessing authority has to keep a complete record of all the Forms being issued to various dealers. 33. There is no denial by the Department at any stage that they had in fact not printed the amended Forms. The Assessees have placed on record a copy of the reply given by the Additional Commissioner of Sales Tax on 22nd December 2005 to the following effect: With reference to your application I.D. No. 5486/ACTT-111 dated 24-11-05 on the above cited subject, it is to inform you that the Form ST-35/1 as amended vide Notification dated 30-09-99 were not got printed by this Department as per record. A copy of the said notification, which is self explanatory, is enclosed. 34. In light of the above letter, the Court fails to understand that how it can be contended before this Court by learned counsel for the Revenue that the amended Form ST-35/1 was available. Further the contention that at no stage did any of the dealers actually seek the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king of goods in the manner specified in clause (c) of section 4(2)(a)(v).] in terms of sub-clause (1) of clause (xxxiv) of rule 11 of the Delhi Sales Tax Rules, 1975. Bill/Cash memo No. date Description of goods Value of goods Total The above statements are true to the best of my knowledge and belief. ...................................... Name of the person signing .................... Declaration and his status in Signature Relation to the purchasing dealer ........................................... Name and address of the purchasing dealer. *Strike out the words/expressions not applicable. 37. It has been contended by the Revenue that it is incumbent on the purchasing dealers to strike out those portions of the above Forms which are not applicable in terms of the asterisk marks given in the Form while giving the declaration in the above Form after 30th September ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, circular or notification issued to the dealers about the availability of such amended ST-8 Forms. 40. In this context the following observations of the Supreme Court in the decision in Ramesh Chawla v. Commissioner of Sales Tax, Delhi (supra) are relevant: Since the relevant forms prescribed under Section 64 of the Delhi Sales Tax Act, 1975, and meant to be carried by the owner or person in-charge of a goods vehicle were not printed by the department and made available, the owners or person in-charge of the goods vehicle could not have the obligation to carry the declaration forms nor could the vehicle be detained for not carrying the forms, so long as the forms were not printed and made available by the department. 41. The Court, therefore, accepts the view expressed in the minority opinion of the Chairman of the Tribunal as being consistent with the law explained in the aforementioned decisions in Polestar Electronics (P) Ltd. (supra) and Ramesh Chawla v. Commissioner of Sales Tax, Delhi (supra). No false declaration 42. The Court also accepts the plea of the Appellants that this was not a case of making a false declaration. The Appellants were issued Form S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... striking out is only permissible when the payment is either by bill or by cash memo or the word me/our has to be used. This declaration clearly states that the goods are intended for resale in Delhi and for no other purpose. 45. With the Department in the present case having continued to issue, even after 30th September 1999 to purchasing dealers, the unamended Forms as they existed prior to 30th September 1999 and with those purchasing dealers continuing to hold valid authorisation in Form ST-37A which had neither been withdrawn nor rendered inoperative, the declarations given by the dealers in the unamended Form ST-35 or ST-35/1 could not be stated to be false declarations. In other words, there was no violation of the declaration by the dealers. In any event, at the time of giving such declarations the dealers could not have known whether the goods were going to be resold within Delhi or sold by way of inter-state sales. Even if the declarations were held to be invalid, it is the seller who would lose the benefit of the exemption. The consequence could not be that the price of the goods purchased would be included in the taxable turnover of the Assessees who are purchasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest will not be justified. The levy of penalty was in any event not justified. The imposition of penalty is not automatic even assuming that the reassessment was justified. The fact that there was a dissenting opinion by one of the Members of the Tribunal, does indicate that it is not a case of concealment of particulars but a case where there is a possible interpretation in favour of the Assessee. Question 3: Validity of the reassessment proceedings 50. The Court has been shown the order passed by the assessing authority. The Court notices that there is nothing in the order sheet which indicates if there is any formation of an opinion in terms of Section 24 of the DST Act that any taxable turnover had escaped assessment. The order sheets do not themselves record any reasons for reopening of the assessment. It was not even disputed by learned counsel for the Revenue that there is no separate noting in the files of the concerned Assessees of any satisfaction by the Assessing Officer of no assessment or escapement of turnover. 51. This was particularly relevant since in the original assessment framed by the assessing authority, which was after the amendment came into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has brushed aside the above contention by simply stating that the inclusion of the purchase price in respect of goods purchased by the Assessees against Form ST-35/1 had not been considered by the assessing authority in the original assessment and that this means that this aspect had escaped assessment while framing the original assessment. A mistake in the original assessment will not by itself constitute a justification for reopening of the assessment particularly where all the material facts were already known to the assessing authority. Secondly, the statutory requirement of recording the formation of an opinion about turnover escaping assessment by the tax by the assessing authority is mandatory. Thirdly, the question whether there was ground for reopening the assessment is not a matter for inference reference. There is a mandatory requirement that there must be a written note on the file by the assessing authority recording satisfaction that there existed grounds for reopening the assessment within the meaning of Section 24 of the DST Act. This again cannot be a mechanical reproduction of the provision. If there is no such recording of satisfaction by the assessing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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