TMI Blog1973 (5) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... certain declaration in form No. XXIV received by the petitioner from the purchasing dealer. The purchasing dealer's, viz., M/s. Sanitary Ware Distributors' registration certificate was issued on the 19th March, 1958, but the date from which the registration certificate was to be valid was not inserted by the officer issuing the certificate. It. has been stated in the statement of case that the said date had not been inserted through inadvertence. Prior to form No. IIA which is substituted by the West Bengal Finance Department Notification dated 14th March, 1961, certificate of registration for a dealer having only one place of business in West Bengal under rule 6 of the Bengal Sales Tax Rules, 1941, contained a sentence to the following effect: "This certificate is valid from......until cancelled." As mentioned hereinbefore, this form was altered by the notification dated 14th March, 1961, and the present form does not contain the sentence "this certificate is valid from...until cancelled". The instant case, however, will have to be governed by the form prevalent prior to 1961. To continue with the narration of events, subsequent to the completion of assessment by the Commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the petitioner that in view of the provisions of the sales tax law a dealer who was subsequently granted the registration certificate should be deemed to be a registered dealer from the date of the application for registration. It was contended that otherwise it would lead to hardship and complication in the transactions of sale. In this connection, reliance was placed on several decisions to which reference would be made later in this judgment. Counsel for the petitioner also drew our attention to the general scheme of the Act. It was contended mainly that under the scheme of the Bengal Finance (Sales Tax) Act, 1941, a dealer whose turnover was beyond a certain limit was obliged under the provisions of the statute to apply for registration and if he did not so apply the dealer would be exposed to certain liabilities of criminal nature. Our attention was drawn to the provision of section 11 (2) as well as the provision of section 22 of the Bengal Finance (Sales Tax) Act, 1941. It was contended that in most cases under section 4(2) registration was not granted within the period of two months from the making of the application. Therefore, it was urged that unless the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific mention of the period from which it would be effective it should be deemed as a matter of law to be effective or operative from the date of the making of the application. In this connection reliance was placed, as mentioned hereinbefore, on several decisions. It is necessary now to deal with these cases. In the case of Ramdhari Ram Chander[1955] 6 S.T.C. 430., the assessee had claimed to deduct from its turnover for the year 1949-50, under section 5(2)(a)(ii) of the Pepsu General Sales Tax Ordinance, certain sales to dealers. But the sales tax authorities disallowed their claim on the ground that they had failed to furnish any evidence whatsoever to show that the purchasing dealers got their registration certificate or they had applied for the same after depositing the necessary fee into the Government treasury before purchasing the goods from the assessee. The learned Financial Commissioner held that in cases where the purchasing dealers had applied for registration certificates before the date of sale, the date of application should be taken into consideration. Except for stating that for the purpose of determining whether the sales were made to the registered dealers, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t held, as it did, was on the basis that delay normally in allowing or dealing with the application of this nature of amendment occurred because of the conduct of the administration. In the case of Subhash Chandra Ghosh v. State of Orissa[1970] 26 S.T.C. 211. , it was held that, where an application for registration under section 7 of the Central Sales Tax Act, 1956, made by an assessee was defective in many particulars, but the assessee rectified these defects when opportunities were given to him under rule 5(2) of the Central Sales Tax (Registration and Turnover) Rules, and the authorities ultimately granted him the certificate of registration, the certificate would be operative from the date of the application. It was not open to the department after the grant of the certificate of registration to say that during the period the application was pending, the assessee was an unregistered dealer. That conclusion was possible only if the application had been rejected for non-removal of defects when it could be said that no application for registration had been made. All these decisions were considered by the Punjab and Haryana High Court in the case of Chandra Industries v. State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1966-67 and the gross turnover in the return was Rs. 2,45,456.96. The petitioner-firm claimed deduction and exemption from tax, inter alia, of an amount of Rs. 1,53,475.32 in respect of the first quarter on the ground that it represented the sale proceeds of goods sold to M/s. Refrigeration Products on 31st May, 1966. The question with which the High Court was concerned was whether a dealer in the matter of liability to pay tax was entitled to deduct from his gross turnover proceeds of the sale of goods made to a dealer during the period when the application of the latter for getting himself registered under section 7 of the Act was pending with the department. The learned judges of the Punjab and Haryana High Court have dealt with the provisions of the Act, the penal consequences and the obligation of the authority dealing with the application for registration when made. Thereafter, the learned Judges have posed the question whether a dealer who honestly and diligently did all that he was required to do by sub-sections (2) and (3) of section 7 and rule 5 should be penalised under section 23(1) read with section 7, subsection (1), and the opinion of the learned judges was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... piry of two months from the date his gross turnover first exceeded the taxable quantum, on the sales effected after such period and every person whose gross turnover exceeded the taxable quantum was liable under the Act to apply for registration. Section 5(1) imposes the obligation that tax shall be payable by a dealer on his taxable turnover at the rate mentioned in the said section. Sub-section (1) and sub-section (2) of section 5 define taxable turnover by excluding or deducting therefrom certain items. Section 5(2) is in the following terms: "(2) In this Act the expression 'taxable turnover' means (in the case of a dealer who is liable to pay tax under section 4, that part of his gross turnover) during any period which remains after deducting therefrom... (ii) sales to a registered dealer of goods of the class or classes specified in the certificate of registration of such dealer, as being intended for resale by him in West Bengal or for use by him directly in the manufacture in West Bengal of goods for sale, and of containers and other materials for the packing of goods of the class or classes so specified.... Provided that deduction on account of sales referred to in subc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be prescribed to assess to the best of his judgment. It is true that the statute imposing penal consequences should be strictly construed but fiscal provisions should also receive strict construction. There is no presumption of law that a certificate of registration or a grant becomes operative from the date of either the application for the grant or application for the certificate. In order to have that consequence, it must be either an imperative consequence flowing from the scheme of the Act or must be expressly provided in the statute or in the rules framed under the statute. The Legislature has not provided that the registration certificate should contain any particular date. The rule prevalent at that time so provided. At one stage of the argument it was suggested that such an authority to the rule-making body was bad. We are, however, not concerned in the instant reference with that controversy. As mentioned hereinbefore, whether retrospective effect could be given in a particular case or not, is not the question with which we are concerned. We are concerned with a question where no date is mentioned as a matter of law under the scheme of the Act, it should be presumed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the meantime, the dealer accumulates his goods by purchases by paying sales tax, and thereafter, he becomes a registered dealer and on the sales becomes liable to sales tax on those accumulated goods which could not normally be sold immediately. It is true that there may be such cases of hardship. At the same time, it was equally pointed out that under the scheme there was a period of two months as mentioned in sub-section (2) of section 4. If it was held that the retrospective effect could be given from the date of the making of the application, then the whole scheme of the Act would become out of gear and it was also contended that under the provisions of the Act when quarterly returns had to be filed and assessment had to be made it was not possible to know the character of the transaction which was dependent on subsequent grant of the certificate. It is, however, not necessary, as mentioned hereinbefore, for our purposes to determine whether in law such a retrospective certificate could be granted under the rules. It is not also necessary for us to determine whether the rules in so far as it authorised, if these did, granting of retrospective certificates were valid or not. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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