TMI Blog1977 (11) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... 954, the Tribunal was justified in law in holding that there was sufficient compliance with the conditions laid down in the said rule 11(4) because the information required in form (12) was avail- able in the returns?" The respondents were registered as a dealer under the Bombay Sales Tax Act, 1953. They filed before the Sales Tax Officer their returns by the prescribed time. They carried on business as manufacturers of paper, and for the purposes of this business they used to purchase materials from various dealers some of whom were unregistered, the materials so purchased being required by the respondents either for the purposes of manufacture of paper or for packing of goods so manufactured by them. In respect of such purchases made by them from unregistered dealers the respondents paid pur- chase tax to the Government. Accordingly, in their returns they claimed a drawback, set-off or refund in respect of the purchase tax so paid by them, contending that they were entitled thereto under the said rule 11(1A). This claim was negatived by the sales tax authorities but was, however, allowed by the Tribunal. The ground on which the sales tax authorities negatived this claim was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and such conditions had to be strictly complied with. Mr. Sanghavi has further submitted that the provisions of the said rule 11(4) were mandatory and not directory and a failure to comply with them would disentitle a dealer from getting any drawback, set-off or refund. To our mind, these questions do not arise for determination before us. For the purposes of decision of these references we will assume that the said rule 11(4) is mandatory, but even so we fail to see how the respondents are disentitled to get the set-off which they were claiming. It is not disputed that each and every condition and requirement of the said rule 11(4) was fulfilled by the respondents. It is also not disputed and the orders of the sales tax authorities and the judgment of the Tribunal are explicit on the point that each and every particular and detail required to be furnished in the said form (12) had in fact been submitted by the respondents. All that was lacking was that these details and particulars were not set out in form (12) but were furnished in the body of the returns. It appears that for a part of the period this form (12) was a separate printed form to be annexed to the return and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities. The first authority relied upon by him was a decision of this High Court in Collector of Sales Tax, Bombay State v. Jamnadas Dharumal[1962] 13 S.T.C. 537. In that case, the dealers made an application for registration on 14th July, 1955, and were registered as dealer with effect from the said date. Thereafter they filed four statements under the said Rules claiming set-off in respect of the general sales tax payable by them on their purchases for the period 1st July, 1954, to 30th June, 1955, that is, in respect of the period during which they were not registered. Thereupon the dealers were assessed to tax for the said period as also a penalty was levied upon them for failure to get themselves registered. The dealers contended that in assessing the tax for the said period they should be allowed the set-off in respect of the tax paid by them on their purchases. Upholding the contention of the department, this High Court held that the dealers were not entitled to the benefit of set-off unless they had complied with the requirements of the said rule 11(4). Relying upon this decision, Mr. Sanghavi submitted that if the requirements of rule 11(4) were not complied with in any pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g signed by the purchasing dealer. Sub- rule (2) of that rule enjoined upon a dealer not to accept, and on the pur- chasing dealer not to give, a declaration except in the prescribed form. Various other rules made stringent provisions to prevent the misuse of the said form. The Supreme Court pointed out the object underlying the stringency of these provisions. The Supreme Court observed: "The object of section 5(2)(a)(ii) of the Act [that is, the Bengal Finance (Sales Tax) Act, 1941] and the Rules made thereunder is self-evident. While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will well nigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the twofold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this High Court consisting of Deshpande and Sawant, JJ., in Century Spinning and Manufacturing Co. Ltd., Bombay v. State of Maharashtrapecial Civil Application No. 1317 of 1971 delivered on 21st April, 1976 (Bombay High Court). In that case the assessees made a claim for set-off for the first time when the orders of assessment were passed. No state- ments were submitted by them along with their returns. No particulars or details of any such set-off were filed or shown in the returns filed by them. What was, however, done was that on 9th October, 1963, when their assessments were being finalised the assessees produced the statement in form (12). It was contended before the Division Bench that the time-limit of one month from the end of the quarter to which the period related, within which these forms were to be submitted, was in excess of the rule-making power conferred upon the State Government. This was negatived by the Division Bench. The Division Bench pointed out that time element was an important factor inasmuch as it afforded a guarantee of the genuineness and accuracy of the account books and registers to be maintained and prevented the commission of fraud and discouraged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. If the department itself has chosen to destroy the relevant evidence, we fail to see why the respondents should suffer thereby. We may also mention that the form of an application for reference to be made to the Tribunal, prescribed by the Bombay Sales Tax Tribunal Regu- lations, 1960, provides that the party applying for reference is to set out in his application the documents or the copies thereof which he requires to be forwarded to this court along with the statement of the case. It is significant that in his application for reference the applicant has not chosen to ask the returns for these periods filed by the respondents or copies thereof to be forwarded to this High Court along with the statements of the case. For the reasons set out above, we answer both the questions submitted to us in the affirmative. As these three references have been heard together and are being dis- posed of by a common judgment, in our opinion, a fair order for costs would be that the applicant would pay to the respondents an aggregate sum of Rs. 300 by way of costs. Reference answered in the affirmative. Appendix [The judgment of the Division Bench of the Bombay High Court consisti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been entered in chronological order within ten days from the date of each such purchase and has further furnished the Collector of Sales Tax with a statement in form (12) annexed to his return for the relevant period within the time prescribed for such return. As, according to the respondents, they were not a manufacturer and, therefore, not liable to pay purchase tax, the respondents had not filed along with their returns for the relevant periods a statement in form (12). However, when the question whether they were a manufacturer or not arose before the Sales Tax Officer, they claimed before him orally, as appears from the records, that they were entitled to set-off the amount of purchase tax which might be assessed against the amount of sales tax payable by them. They further contended that from (12) was not applicable as the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, were subject to section 42 of the Bombay Sales Tax Act, 1959, which, according to them, did not prescribe the filing of any statement. This contention of theirs was negatived by the Sales Tax Officer, and no set-off was allowed to them. The appeals filed by the respondents against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the respondents were entitled to set-off the purchase tax on the purchases of wooden logs purchased by them from unregistered dealers during the assessment periods 1st April, 1957, to 31st March, 1958, and 1st April, 1958, to 31st March, 1959, notwithstanding the fact that they had not filed the statements in form (12) as required by rule 11(4) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954?" Before we proceed to deal with the correctness of the order of the Tribunal, we may mention that in Miscellaneous Petition No. 212 of 1969- National Electrical Industries Limited v. H.B. Munshi-filed on the Original Side of this Court, decided on 1st November, 1974, Lentin, J., held that rule 11(4)(a) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, to the extent that it laid down a time-limit with- in which a set-off could be claimed by a dealer entitled to a set-off was outside the scope of the rule-making authority of the State Government and was ultra vires the mandatory provisions of section 18B(2) of the Bombay Sales Tax Act, 1953. Relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Officer. It is true that filing such a statement per se would have prejudiced their contention that they were not a manufacturer, but there was nothing to preclude them from filing it without prejudice to their said contention that they were not a manufacturer. This too they failed to do. Had they filed or applied to file a statement in form (12) without prejudice to their contention that they were not a manufacturer, and had the Sales Tax Officer then rejected the said statements or refused to take them on the file, we could have held that the Tribunal was justified in coming to the conclusion it did, but as afore- said the respondents made no attempt to file such statements. They did not even file or apply to file such statements when they went in appeal to the Assistant Commissioner of Sales Tax or in revision to the Commissioner of Sales Tax. Even there they rested content with their contention that they were not bound to file the statements. The facts and circumstances are clearly against the respondents. They had an opportunity at each stage to file these statements or at least apply that they be taken on file without prejudice to their main contention that they were no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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