TMI Blog1968 (11) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... nter-State trade. They also at times export motor spare parts out of this country. The modus operandi followed by the applicants is as follows: As and when the customer steps into the office of the applicants, they first enquire from the customer whether he would resell the goods in this State or whether he would sell the goods in the course of interState trade or commerce. In case the customer declares that he requires the goods for the purpose of resale in this State, the applicants mark "Form K" on the bill and charge only sales tax. When the customer declares that he will sell the goods in the course of inter-State trade and despatch them outside Bombay State, the applicants mark on the invoice "Forms J and K" and do not charge any tax. When the customer does not declare as to whether he is going to resell the goods locally or in the course of inter-State trade, the applicants charge both taxes, sales tax and general sales tax. At the time of effecting the sale itself the applicants take sufficient care to ascertain the intention of the purchasing dealer as to whether he would resell the goods locally or despatch them outside the State of Bombay. We are concerned in these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Engineering Co., Ltd. v. The State of Bombay referred to above.............." When it was urged before the Tribunal on behalf of the applicants that it was not possible for the selling dealer like the assessee in this case to establish either the date of sale or the date of despatch of the goods covered by the certificate by the purchasing dealer, the Tribunal observed as follows: "9. Coming now to the other contention of the learned Advocate regarding those declarations in Form J which have been issued by the purchaser within six months from the date of sale, we have to state that before the lower authorities, the assessee has not proved or tried to establish that such declarations were issued by the purchaser before the date of despatch by the purchaser. It is true that the seller cannot be penalised for the non-compliance by his purchaser as regards the maintenance of Forms NA and NB under the Act, but the burden of proving that the declarations which the seller has obtained from the buyer have been issued by the buyer before the date of despatch by him is squarely on the seller and, in our opinion, the applicant, i.e., the seller before us, has not discharged this burden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the territory of India, by him or by the registered dealers to whom he sells the goods: Provided that- (i) where a certificate has been furnished under this clause in respect of any goods, the purchasing dealer shall not be entitled to claim a deduction under this clause in respect of his sale of the said goods; and (ii) where any goods to which this clause applies are not shown to the satisfaction of the Collector to have been sold in the course of interState trade or commerce or in the course of the export of goods out of the territory of India, by the dealer furnishing such certificate or by a registered dealer to whom he has sold the goods within a period of six months from the date of purchase by the dealer furnishing the certificate, the said dealer shall be liable to pay purchase tax under clause (b) of section 10 on the purchase of such goods. Explanation.-For the purpose of this section a purchase of goods shall not include any purchase which is not liable to tax by virtue of the provisions of section 46 or any purchase which takes place in the course of trade or commerce between the area of the pre-Reorganisation State of Bombay, excluding the transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfaction of the Collector that the goods have been sold by him or by a registered dealer to whom he has sold the goods, in the course of inter-State trade or commerce or in the course of export of goods out of the territory of India, within a period of six months from the date of purchase by the dealer furnishing such certificate. Provided that no purchase tax shall be levied under clause (a) on the purchase of any goods specified in entries 3, 6 to 9, 13, 14, 17 and 18 (both inclusive) of Schedule B if such goods are sold by the dealer after such purchase." This substitution was also made by the same Bombay Act 16 of 1957 and was put into effect from 8th April, 1957. The contention of the applicants in support of these references is that on a plain reading of the provisions of section 8(b), as is now applicable for the relevant period, an assessee like the applicants is entitled to a deduction from his turnover in respect of sales of goods to a dealer who holds an authorization, the turnover in respect of the sales of goods to him in respect of which the purchasing dealer furnishes the relevant certificate that the goods sold to him are intended for sale in the course of inter- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to give such certificate is a dealer who has obtained an authorization under rule 11 of the said Rules. The authorization is in Form H. The authorization in Form H is given subject to certain terms and conditions mentioned therein. The material terms in the authorization in Form H are to the following effect: "5. The sales of other dealers to the holder of this authorization will be free of sales tax in the case of goods certified by him in Form J declaring that the goods are intended for being sold in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India by him or by registered dealers to whom he sells the goods. 6.. The holder of this authorization or any person nominated by him under paragraph 7 of this authorization shall furnish to the selling dealer a certificate in Form J in respect of any goods purchased by the said holder under the authorization. The certificates in the said Form J furnished by the said holder shall be serially numbered by him in chronological order and the said holder shall keep and produce before the Collector or the assessing authority, if so required, mechanically duplicated (or carbon) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, duly signed and dated. Similarly under rule 14-B of the said Rules every dealer who holds an authorization shall, in respect of the goods purchased by him by furnishing to the selling dealer a certificate in Form J, maintain a register in Form NA of the sale of such goods by him in the course of inter-State trade or commerce or export out of the territory of India. Now a perusal of the Form NA Register will show that the purchasing dealer has to maintain in meticulous details all the transactions of such purchases, viz., date, quantity, serial No. and date of the certificate in Form J under which the goods were purchased, purchase price; and what is most important, in column 7 the date of sale in the course of inter-State trade or commerce or export out of India, and other details in the subsequent column. Thus it will be seen that issuance of a certificate in Form J is not an isolated act to be performed by the purchasing dealer without responsibility. He has to maintain a proper register, give all the necessary details and to connect every sale in respect of his certificate with every purchase in respect of these goods from a selling dealer to whom the certificate in Form J i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period of six months seems to be suggested by the department in view of the provisions of section 10(b), which we have reproduced above; it seems to be assumed that the purchases of goods purchased with the intention of selling them in the course of inter-State trade or commerce or by export are necessarily conditioned by an obligation on the part of the purchasing dealer that he will sell the goods within a period of six months as provided by section 10(b) of the Act. It, therefore, seems to be urged that this period of six months is the limit of time within which in any case the certificate in Form J must be issued or must be obtained. We are not in a position to accept this interpretation of section 8(b) vis-a-vis section 10(b) of the Act. It is true that a purchasing dealer or authorized dealer who issues a certificate in respect of purchase of goods from a selling dealer is required to pay purchase tax if he does not sell the goods in the course of interState trade or commerce or in the course of export of goods outside the territory of India within a period of six months from the date of purchase for which certificate in Form J is given by him. But we are unable to hold b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not so sold, the purchasing dealer at once becomes liable for payment of purchase tax under section 10(b). On the other hand, if it is found that the certificate is given after the date of the sale, it would amount to giving a certificate which is not true. The Legislature seems to have made ample provision and prescribed heavy penalties for issuance of such a false certificate. In this connection our attention was invited to the provisions of section 39A of the Sales Tax Act, 1953. That section reads as follows: "Section 39A. Penalty for false declaration or certificate or for not abiding by declaration or certificate furnished.-(1) Where under the provisions of this Act or the rules made thereunder or under the relevant sales tax law, a person furnishes a declaration or certificate by reason of which any tax under this Act or the relevant sales tax law is not leviable on any sale or purchase and where such person knew or had reason to believe that such declaration or certificate was false or such person fails to abide by it, or acts in contravention of the recitals or terms of such declaration or certificate the Collector may after giving such person a reasonable opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hension is well founded either. In case a purchasing dealer fails to satisfy the authorities that he has effected sales in respect of the goods covered by the certificate within a period of six months, it would also follow as a matter of course that such sales will be liable to purchase tax payable by the purchasing dealer under section 10(b) of the Act. The burden in all such cases will be on the purchasing dealer to establish as to when he effected the sales of goods which he purchased under the certificate in Form J. What we are trying to point out by an examination of the scheme of sections 8 and 10, Forms J, H, N and NA and the Rules made under the Act is to show that so far as the selling dealer is concerned, he seems to be entitled to deductions under section 8(b) the moment he produces a certificate in Form J in respect of the sales effected by him in favour of a purchasing dealer who is also an authorized dealer. Not only there is no limit of time for issuance of such certificate provided under the statute, but the safeguards which we have pointed out make it unlikely that the certificates will be issued after the sales are effected by the purchasing dealer. The only safeg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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