1968 (11) TMI 89 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of Section 8(b) of the Bombay Sales Tax Act, 1953.
2. Validity of deductions claimed under Section 8(b).
3. Requirement of certificates in Form J.
4. Timing of obtaining and issuing certificates in Form J.
5. Burden of proof on selling and purchasing dealers.
6. Relevance of despatch of goods.
7. Implications of Section 10(b) and Section 39A.

Issue-wise Detailed Analysis:

1. Interpretation of Section 8(b) of the Bombay Sales Tax Act, 1953:
The court examined the changes in Section 8(b) over different periods and noted that the relevant provision applicable during the period in question required a certificate declaring that the goods sold were intended for sale in inter-State trade or commerce or export. The court emphasized that the scheme had been altered from previous periods where the focus was on the despatch of goods outside the state.

2. Validity of Deductions Claimed Under Section 8(b):
The court held that the assessee is entitled to a deduction from turnover in respect of sales of goods to a dealer who holds an authorization and furnishes the relevant certificate. The court rejected the notion that there was any implied time limit for furnishing such certificates, noting that the statute did not prescribe a specific time frame for this.

3. Requirement of Certificates in Form J:
The court noted that the certificate in Form J must declare that the goods purchased are intended for sale in inter-State trade or commerce or export. The certificate must be issued by the purchasing dealer at a time when the goods are yet to be sold.

4. Timing of Obtaining and Issuing Certificates in Form J:
The court rejected the requirement that the certificate must be issued within six months from the date of sale or before the date of despatch of goods. The court emphasized that the relevant provision did not require the despatch of goods to be considered for the deduction under Section 8(b).

5. Burden of Proof on Selling and Purchasing Dealers:
The court clarified that the burden of proving that the goods were sold in inter-State trade or commerce or export within six months lies with the purchasing dealer. The selling dealer is entitled to deductions upon producing the certificate in Form J, and there is no obligation on the selling dealer to prove the timing of the certificate issuance.

6. Relevance of Despatch of Goods:
The court found that the despatch of goods was not relevant under the applicable provision of Section 8(b) for the period in question. The focus was on the intention of sale in inter-State trade or commerce or export, not on the actual despatch of goods.

7. Implications of Section 10(b) and Section 39A:
Section 10(b) imposes a liability for purchase tax if the goods are not sold within six months in the course of inter-State trade or commerce or export. Section 39A provides penalties for false declarations. The court noted that these provisions ensure that the purchasing dealer is held accountable, and the selling dealer's right to deduction is not affected by the purchasing dealer's failure to comply.

Conclusion:
The court concluded that the Tribunal was not justified in disallowing the claims on the grounds that the certificates in Form J were not shown to have been issued before the date of despatch or within six months from the date of sale. The references were answered in favor of the assessee, with costs awarded and deposits refunded.

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