2009 (3) TMI 1028 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment involves the interpretation of Section 22(2) of the Punjab General Sales Tax Act, 1948 and the question of whether a dealer can be held liable for tax and penalty due to the fault of the department in not issuing notifications regarding the cancellation of a registration certificate.

Summary:

Issue 1: Application under Section 22(2) of the Act for reference of a question of law to the court

The petitioner-dealer filed an application under Section 22(2) of the Act seeking a direction to the Sales Tax Tribunal to refer a question of law to the court for adjudication. The court directed the Tribunal to refer the question regarding the liability of the dealer for tax and penalty due to the department's failure to issue cancellation notifications.

Issue 2: Interpretation of Section 5(2)(a)(iii) of the Act and relevant case laws

The petitioner argued that sales made to dealers before the publication of cancellation orders in the official gazette should qualify for exemption under Section 5(2)(a)(iii) as the dealer could not have knowledge of the cancellation. The petitioner relied on Rule 12(2) of the Punjab General Sales Tax Rules and case laws like Arjan Radio House case and a Delhi High Court judgment in support of their argument.

Issue 3: Imputation of knowledge and the requirement of gazette publication

The State Counsel contended that once an order cancelling a dealer's certificate is passed, knowledge should be imputed to all parties involved. However, the court held that without publication in the official gazette, knowledge cannot be imputed to the selling dealer. The court emphasized the importance of gazette notification for imparting knowledge to the public.

Conclusion:

The court ruled in favor of the dealer-assessee, stating that sales made before the publication of cancellation orders in the official gazette should be considered bona fide and qualify for exemption as per Section 5(2)(a)(iii) of the Act. The court relied on previous judgments to support its decision, emphasizing the necessity of gazette notification for imputing knowledge. Therefore, the question of law was decided against the revenue and in favor of the dealer-assessee.