9911796707
TMI Blog1980 (7) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... his order dated 10th April, 1978. In the revision filed by the petitioner, the order of the Sales Tax Officer was set aside and the application was remanded for deciding it afresh after notice to the petitioner. The application was again dismissed by the Sales Tax Officer by his order dated 1st July, 1978. The revision filed by the petitioner was dismissed by the Commissioner of Sales Tax on 4th October, 1978. The petitioner by this petition challenges these orders. 2.. The application made by the petitioner for registration as a dealer was rejected by the Sales Tax Officer on two grounds. The first ground was that the petitioner-company has been formed by a partnership concern M/s. Dawar Brothers with an intention of avoiding payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. They have not paid these dues in spite of the facility of payment in instalments given to them by the Government. Not only that they are not paying the arrears, they are also not paying the current dues with the returns (No C forms are, therefore, being issued to him). (2) The main partners in M/s. Tracways Private Limited are Smt. Roma Dawar and Smt. Aruna Dawar, wives of the two partners of Dawar Brothers, namely, Shri Suraj Kishan Dawar and Shri Kishan Dawar, respectively. (3) M/s. Tracways Private Limited propose to deal in the same commodities in which M/s. Dawar Brothers have been dealing. (4) The shares of this company have been purchased mainly by the wives of the two Dawar Brothers, namely, Smt. Roma Dawar and Smt. Aruna Daw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler whose turnover is likely to exceed the prescribed limits he can apply under section 16 for registration. If the Sales Tax Officer, on receipt of such an application for registration, is satisfied that the applicant has correctly given all requisite information, paid the prescribed fee and the application is in order, he is bound to allow the application for registration and to grant registration as is provided in rule 8 of the Rules made under the Act. 6.. The argument of the learned counsel for the petitioner is that it was not open to the Sales Tax Officer or the Commissioner to refuse registration on the ground that the application for registration has been made to circumvent the Act and to avoid payment of tax due from M/s. Dawar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases where the corporate entity is used for tax evasion or to circumvent tax avoidance or to perpetrate fraud: see Income-tax Commissioner, Madras v. Meenakshi Mills, Madurai[1967] 63 I.T.R. 609 at 616 (S.C.) A.I.R. 1967 S.C. 819 at 822., and Juggilal v. Income-tax Commissioner, U.P.[1969] 73 I.T.R. 702 at 710 (S.C.) A.I.R. 1969 S.C. 932 at 936. The view taken by the Supreme Court is in line with the modern trend. As stated by Friedmann: "A strongly formalistic and rigid interpretation of the corporate form is increasingly giving way to a more sociological and relativist interpretation. It is particularly marked in cases where the corporate form is apt to be used as a device to frustrate the public interest in the collection of taxes or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pite of the cancellation of the registration certificate for non-payment of tax. The company was clearly a device to avoid payment of tax and to circumvent the provisions of the law. In the circumstances, it is open to us to ignore the corporate entity of the company and to see through the facade and to hold that in reality the application made by the petitioner was made by the partnership of M/s. Dawar Brothers for its benefit. If registration could not have been granted to the partnership of M/s. Dawar Brothers in view of the fact that its registration was cancelled for non-payment of tax, it cannot be granted to the petitioner also until the arrears are paid by M/s. Dawar Brothers. In our opinion, the Sales Tax Officer and the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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