TMI Blog1985 (8) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... s in this State of M.P. at concessional rate in accordance with section 8(1) of the Act, giving the declaration in form XII-A. The paper was then sent to the dealers at Allahabad in the State of Uttar Pradesh for manufacture of exercise books, which were then brought back to the State of Madhya Pradesh and sold within the State of M.P. The assessing authority completed assessments for both these periods, accepting the dealer's claim for payment of tax at the concessional rate in accordance with section 8(1) of the Act. 4.. The Additional Commissioner of Sales Tax reopened this assessment under section 39(2) of the Act in revision. He took the view that on these facts, the dealer was not entitled to pay tax at the concessional rate and, therefore, a case for imposition of penalty under section 8(2) of the Act had arisen. The Additional Commissioner accordingly imposed a penalty of Rs. 9,110 for the first period of assessment and Rs. 12,450 for the second period, in addition to the demand of additional tax of Rs. 360 for the latter period. The Additional Commissioner's order imposing the penalty under section 8(2) of the Act is dated 24 March, 1976. 5.. The dealer appealed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be prescribed, the rate of tax payable on the sale to or purchase by a registered dealer of any raw material for the manufacture of other goods for sale in the State of Madhya Pradesh or in the course of inter-State trade or commerce shall be one per cent of the sale or purchase of such raw material. (2) Where any raw material purchased by a registered dealer under subsection (1) is utilised by him for any purpose other than a purpose specified in the said sub-section, such dealer shall be liable to pay as penalty an amount not less than the difference between the amount of tax on the sale of such raw material at the full rates mentioned in column 3 of Schedule II and the amount of tax payable under sub-section (1), and not exceeding one and one-quarter times the amount of tax at such full rate as the Commissioner may determine having regard to the circumstances in which such use was made: * * *" The relevant form XII-A is as under: "FORM XII-A Declaration [See rule 20(3)] I,...............a dealer holding registration certificate No...............hereby declare that I have purchased the under-mentioned goods for Rs...............(in figures) Rs....................(in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such manufacture. In a way, the condition is only one, i.e., manufacture of the raw material into some other goods to be sold within the State of M.P. For satisfaction of this condition, the place of manufacture is not material, so long as the sale of the manufactured goods is within the State of M.P. 9.. Sub-section (2) exposes such a dealer to penalty where any raw material purchased under sub-section (1) "is utilised by him for any purpose other than the purpose specified in the said sub-section". This means that the penalty is attracted, if utilisation of the raw material is for any purpose other than the specified purpose, i.e., for manufacture of other goods to be sold within the State of M.P. so long as the raw material is utilised for manufacture of the specified goods and the manufactured goods are sold within the State of M.P., penalty is not attracted. The place of manufacture, other requirement being satisfied, does not really come in as a relevant factor in this connection. The relevant words in form XII-A in which the requisite declaration is to be given by the dealer for getting the benefit of concessional rate under section 8(1) are "that the form XII-A goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation, obviously the requirement of sale of the manufactured goods within the State of M.P. not being satisfied, the case could not fall within the ambit of section 8(1). The further fact that manufacture of the goods was also outside the State of M.P., was, therefore, not significant and a reference to that fact as well is not the ratio of that at decision. That decision is clearly distinguishable on facts and it cannot be read as an authority to hold that sub-section (1) of section 8 not only requires sale of the manufactured goods within the State of M.P. but also its manufacture within the State of Madhya Pradesh. 11.. The decision of the Supreme Court in Polestar Electronic (P.) Ltd. v. Additional Commissioner of Sales Tax [1978] 41 STC 409 (SC) also indicates the proper construction. The relevant provision related to a deduction while computing the taxable turnover for the purpose of sales tax under the law applicable in Delhi. The deduction was permitted where the purchase was of goods "specified in the certificate of registration of such dealer, as being intended for resale by him, or for use by him as raw materials in the manufacture of goods for sale". Where the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any geographical limitation and according to its plain natural meaning it would mean resale anywhere and not necessarily inside Delhi. Even where the purchasing dealer resells the goods outside Delhi, he would satisfy the requirements of the statutory provision according to its plain grammatical meaning. There are no words such as inside the Union Territory of Delhi' qualifying 'resale' so as to limit it to resale within the territory of Delhi." (at page 422) "We think that in a taxing statute like the present which is intended to tax the dealings of ordinary traders, if the intention of the Legislature were that in order to qualify a sale of goods for deduction, 'resale' of it must necessarily be inside Delhi, the Legislature would have expressed itself clearly and not left its intention to be gathered by doubtful implication from other provisions of the Act. The absence of specific words limiting 'resale' inside the territory of Delhi is not without significance and it cannot be made good by a process of judicial construction, for to do so would be to attribute to the Legislature an intention which it has chosen not to express and to usurp the legislative function. " (at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Territory of Delhi' were added after the word 'manufacture' so as to provide that manufacture should be inside the territory of Delhi. It was also provided by the amendment that the sale of manufactured goods should be inside Delhi or in the course of inter-State trade or commerce or in the course of export outside India. This amendment clearly excluded manufacture of goods as also sale of manufactured goods outside Delhi." (at pages 428 and 429) "We must, therefore, reach the conclusion that during the relevant assessment years 'resale' within the meaning of section 5(2)(a)(ii) and the second proviso was not confined to the territory of Delhi, but also included resale outside the territory of Delhi and, similarly, for the period up to 28th May, 1972 when section 5(2)(a)(ii) was amended by the Finance Act, 1972 'manufacture' and 'sale' contemplated by the section were not restricted to the territory of Delhi but could also be outside. There was no geographical limitation confining 'resale', 'manufacture' or 'sale' to the territory of Delhi." (at page 430) "Section 5(2)(a)(ii) was amended by the Finance Act, 1972 and the words 'in the Union Territory of Delhi' were added aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any raw material for the manufacture of other goods for sale in the State of Madhya Pradesh" is supported by the above decision of the Supreme Court. The words "in the State of Madhya Pradesh" can qualify only "sale" and not also "manufacture of other goods". The words used in the declaration given in form XII-A by the dealer also support this view and the same can be used for construction of this expression in the statute, as was done by the Supreme Court decision. It follows that where the sale of manufactured goods is either "in the State of Madhya Pradesh" or "in the course of inter-State trade or commerce", the condition is satisfied on utilisation of raw material for manufacture of that goods, irrespective of this fact whether the process of manufacture was "in the State of Madhya Pradesh" or outside it. 16.. As a result of the aforesaid discussion, it followed that there was no misuse of the declaration in form XII-A by the dealer and the benefit of concessional rate in accordance with section 8(1) of the Act was rightly given by the assessing authority to the dealer and that the Additional Commissioner of Sales Tax as well as the Tribunal acted contrary to law in takin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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