TMI Blog1973 (7) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... is given, is satisfied that the same is in order, then that authority shall "in accordance with such rules and on payment of such fees as may be prescribed, register the applicant and grant him a certificate of registration in the prescribed forms which may specify the class or classes of goods for the purpose of sub-clause (ii) of clause (a) of sub-section (2) of section 5". Now, this application for registration was granted on 16th June, 1965, though this date is mentioned as 8th June, 1965, in some of the orders. But, this discrepancy is hardly of any importance for our purposes. It is the admitted case that after the issue of the registration certificate, viz., on 20th July, 1965, the assessee submitted all the four quarterly returns relating to the year 1964-65 and also deposited a sum of Rs. 19,562.36. The Assessing Authority by its order dated 26th May, 1967, felt that there was a delay in filing the returns and depositing the money. On behalf of the assessee, it was contended that the registration certificate having been received late, the quarterly returns could not be submitted in time. Apparently, on this basis, the assessee wanted to escape imposition of a penalty. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (1) do not apply "shall be liable to pay tax under this Act on the expiry of 30 days after the date on which his gross turnover during any year first exceeds the taxable quantum". "Taxable quantum" is detailed in sub-section (5) and need not be referred in detail. Relevant part of section 7 of the Act is as under: "(1) No dealer shall, while being liable to pay tax under this Act carry on business as a dealer unless he has been registered and possesses a registration certificate. (2) Every dealer required by sub-section (1) to be registered shall make application in this behalf in the prescribed manner to the prescribed authority. (3) If the said authority is satisfied that an application for registration is in order, he shall, in accordance with such rules and on payment of such fees as may be prescribed, register the applicant and grant him a certificate of registration in the prescribed form which may specify the class or classes of goods for the purposes of sub-clause (ii) of clause (a) of sub-section (2) of section 5..........." Section 10 deals with the payment of tax and filing of the returns. Sub-section (3) of this section runs as under: "(3) Such dealers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was that during the period the application for the grant of registration certificate remained pending with the Assessing Authority, he could not be treated as "a registered dealer" and that he became a registered dealer only on 16th June, 1965, when his application was granted and the certificate was issued. In the registration certificate, no doubt, it was mentioned that the liability of the assessee was with effect from 20th February, 1964. It is also not disputed that a return was filed by the assessee on 20th July, 1965, for the accounting period 1964-65. He also deposited a sum of Rs. 19,562.36 as tax which became payable according to the return filed by the assessee. The assessee also produced his account books and, inter alia, it was noticed that the gross sales amounted to nearly Rs. 7 lacs "which are inclusive of tax". In other words, although during 1964-65, as stated by the assessee, his application remained pending and he was not a registered dealer, yet he had been charging sales tax from his customers. The assessee also claimed various types of deductions which are available to a registered dealer. Before the Tribunal as well as before us great reliance was placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the assessee, as provided under sub-section (1) and on the date on which the return was filed he was, in fact, a "registered dealer", because before the date of the filing of the return, the registration certificate had already been issued and the status of the assessee was not merely that of a "dealer" but of a "registered dealer". The sole question for determination is whether, merely because the application for the grant of registration certificate remains pending for a long period, a "dealer", who has become a "registered dealer" subsequently, is not liable to pay tax for the intervening period during which the application remains pending. The wording of sub-section (1) of section 7 of the Act is rather peculiar. According to this section, as soon as a dealer becomes liable to pay tax, because his turnover exceeds the quantum provided in section 4, he must stop his business, as he cannot be said to be "registered" and in possession of a "registration certificate". At best he can file an application the moment he comes to know that his gross turnover during the preceding year exceeds the prescribed limit, but there must necessarily be a time-lag between the filing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on certificate, which was from 16th November, 1956, to 14th May, 1957, was due to any fault or negligence on the part of the assessee. The subordinate authorities came to the conclusion that it was the fault of the assessee but the Commissioner of Commercial Taxes came to the conclusion that this delay was not due to the fault or negligence on the part of the assessee and he, accordingly, directed that a sum of Rs. 29.95 representing the sales tax paid by the assessee to its sellers for the goods intended for resale should be adjusted towards sales tax due for subsequent periods. With regard to the question, whether the assessee was to be assessed for sales tax "on transactions of sale made between the 3rd November, 1956, and 14th May, 1957," the matter was taken to the Additional Member, Board of Revenue, and the contention that by virtue of section 15A of the Act the exemption from payment of sales tax could be granted, was rejected by him, because "section 15A applies to purchases made by the dealer from his sellers and it has nothing to do with payment of sales tax for sales made by him to other customers ". He, however, held that the liability to pay sales tax should not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till the date of the actual granting of certificate will be subject to the conditions laid down in sub-section (5) of section 13. (2) Covered by the answer to question No. (1). (3) Payment of tax by a dealer ordinarily will not be dependent on his having realised the tax. But if he is prevented from realising the tax on account of the delay on the part of the sales tax department in granting him registration certificate, the authority concerned has discretion not to assess him to tax for the period of the delay. From the above it is quite clear that the liability for payment of tax arises as soon as a dealer's gross turnover exceeds the permissible limit. This is clearly provided in section 4 of the Punjab Act. Section 11 only provides for a procedure. If such a dealer fails to make an application for registration, he is liable to pay penalty and also to be assessed according to the best judgment under sub-section (6) of section 11. However, if the dealer makes an application in time, the penal consequences of sub-section (6) are not attracted. That, however, would not mean that he escapes liability for the period for which the application remains pending. There is no provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax under the Act irrespective of whether the registration under section 8 was valid or not. That liability arose under section 4, which was the charging section, and it was not conditional on the registration of the dealer under section 8; (2) that even if the registration of the appellant as a dealer under section 8 was bad that had no effect on the validity of the proceedings taken against it under the Act and the assessment of tax made thereunder." In view of the above discussion, we are definitely of the view that the liability of the assessee was not dependent on the issue of the registration certificate and that it arose under sub-section (1) of section 4 of the Act as soon as his gross turnover exceeded the limit fixed. There is no dispute that his liability did arise from 20th February, 1964. The registration certificate though issued on 16th June, 1965, had clearly mentioned that the liability arose with effect from 20th February, 1964. While filing the return and while presenting the case before the Assessing Authority, it was not suggested on behalf of the assessee that he had in any way been adversely affected by the delay in the issue of the registration certific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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