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1991 (7) TMI 325 - HC - VAT and Sales Tax

Issues Involved:
1. Applicability of Section 35(1)(b) of the Bombay Sales Tax Act, 1959.
2. Estoppel from denying genuineness of sales.
3. Disallowance of deductions under Section 7(2)(iii) of the Bombay Sales Tax Act, 1959.
4. Applicability of Section 7(3) of the Bombay Sales Tax Act, 1959, and Section 9(4) of the Gujarat Sales Tax Act, 1969, to sales made to unlicensed dealers.

Detailed Analysis:

Issue 1: Applicability of Section 35(1)(b) of the Bombay Sales Tax Act, 1959
The Tribunal held that the applicant-firm suppressed material particulars relating to sales made to M/s. Vijay Traders. Consequently, the provisions of Section 35(1)(b) of the Bombay Sales Tax Act, 1959, were rightly invoked by the sales tax authorities, making the limitation of eight years applicable. The High Court affirmed this view, recognizing that the dealer's actions justified the extended limitation period.

Issue 2: Estoppel from Denying Genuineness of Sales
The Tribunal found that the applicant-firm was estopped from denying the genuineness of sales made to M/s. Vijay Traders, as evidenced by the returns filed by it. The dealer could not later contend that such transactions were mere "havala transactions" or accommodation sales. The High Court upheld this finding, stating that the dealer was bound by its earlier declarations and could not contradict them.

Issue 3: Disallowance of Deductions under Section 7(2)(iii) of the Bombay Sales Tax Act, 1959
Given the Tribunal's findings on the genuineness of sales, it held that deductions under Section 7(2)(iii) of the Bombay Sales Tax Act, 1959, were rightly disallowed. The High Court agreed, noting that the disallowance was justified based on the established facts and the Tribunal's interpretation of the law.

Issue 4: Applicability of Section 7(3) of the Bombay Sales Tax Act, 1959, and Section 9(4) of the Gujarat Sales Tax Act, 1969
The Tribunal ruled that if a licensed dealer made the first sale of declared goods to a dealer not holding a license, the protection under Section 7(3) of the Bombay Sales Tax Act, 1959, read with Section 9(4) of the Gujarat Sales Tax Act, 1969, was not available. The High Court concurred, stating that the dealer, being the last licensed dealer who sold goods to unlicensed dealers, was rightly assessed to tax. The Court rejected the notion of a "second last dealer," emphasizing that the tax was correctly levied on the last dealer in the chain.

Conclusion:
The High Court answered all the questions referred to it in the affirmative, against the assessee and in favor of the Revenue. The Court upheld the Tribunal's findings and the applicability of the relevant sections of the Bombay and Gujarat Sales Tax Acts, confirming that the dealer was liable for the assessed taxes. The reference was answered in the affirmative with no order as to costs.

 

 

 

 

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