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TMI Blog1984 (3) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... ome person other than such purchasing registered dealer or licenceholder?" 2.. The period of assessment in question is from 1st April, 1950, to 31st October, 1952. In respect of certain transactions of sale of goods during this period, the respondent-assessee, M/s. R. Kantilal, who is a registered dealer, claimed deduction from the taxable turnover under rule I(ii)(a) of sub-section (3) of section 6 of the Act. In support of the claim for deduction, the assessee produced the certificates issued by the purchasing dealer as provided in rule 26 of the Bombay Sales Tax Rules, 1946 (hereinafter referred to as the said Rules). The Sales Tax Officer disallowed the claim of the assessee in respect of these sales on the ground that the sales appeared to be bogus. In appeal the Assistant Commissioner of Sales Tax allowed some of these sales and rejected others. Some sales were disallowed on the ground that the signatures of the purchasing dealers on the declarations issued by them do not appear to be genuine. Some sales were disallowed on the ground that the declarations were signed by persons whose status and authority were not established. In revision application preferred by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chedule I, during any period of his liability to pay the tax there shall first be deducted his turnover during that period in respect of sales or supplies to a registered dealer of goods certified by him as being intended by him for resale. It is common ground that the assessee would be entitled to deduction as claimed by him, if the declarations of the purchasing dealers are found to be genuine. Rule 26 of the said Rules lays down the procedure for claiming deduction from gross turnover under section 6. Sub-rule (2) of rule 26 inter alia provides that a dealer who wishes to claim a deduction under clause (ii) of rule I of sub-section (3) of section 6 shall on demand produce in respect of the sale for which the deduction is claimed the copy of the counterfoil of the relevant cash receipt, bill or invoice, if any, and a certificate in writing by the purchasing dealer or by a person duly nominated by the purchasing dealer in this behalf, that the goods in question are required by such dealer for resale. Sub-rule (3) of rule 26 prescribed the form of the certificate of the declaration to be issued by the purchasing dealer. The said form shows that it should mention the name of the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinarily the assessee will be entitled to get deductions on the basis of certificate produced before the sales tax authority. However, it cannot be said that the production of the certificate purporting to bear the signature of the puschasing dealer is conclusive and whenever the officer has some reason to suspect the genuineness of the signature it would be open to him to verify from the form in respect of both the assessee as well as the purchasing dealer to compare the signature on the certificate produced by the purchasing dealer. Ordinarily the department must be having in its possession the record of the registered dealer in whose name the certificate purports to have been made. It is also possible for the department to look into its own record relating to the assessee whether similar certificates were produced by the assessee in the past. This record will show as to whether at some occasion the purchasing dealer had signed in the language in which the certificate purports to have been signed by him. If such records show that the purchasing dealer had never signed in the language in which it purports to be or that the signature of the purchasing dealer in the certificate is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharashtra, Sales Tax Reference No. 2 of 1969 decided on 31st January, 1975 (printed at page 284 infra) to which my learned brother was a party. In that case the question raised was whether the declarations signed by the two managers Shri Sathe and Shri Pandya of the registered dealer were disallowed by the taxing authorities on the ground that certificate in form K to the Bombay Sales Tax (Registration, Licensing and Authorisation) Rules, 1954, was not signed by a person authorised to do so. On the facts of that case this Court held that the assessees had made no attempt whatsoever to prove that Sathe and Pandya or either of them were persons nominated as required by clause (7) of the licence issued to the purchasing dealer, which shows that in the circumstances of that case the burden was passed on to the assessee to prove that the declarations were signed by the person duly nominated, as required by clause (7) of the licence. The judgment of the Division Bench shows that under rule 17 of the Bombay Sales Tax (Exemption, Set-off and Composition) Rules, 1954, which was applicable in that case expressly provided that the burden of proving to the satisfaction of the Collector, int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of burden of proof will, however, be determined in accordance with what we have stated above in the present case. 10.. In the present case, however, Mr. Jetly informs that the department has no records of the relevant period pertaining to both the assessee as well as the purchasing dealer. In the circumstances, therefore, the direction given by the Tribunal, i.e., if it is found that the declarations signed in Multani read as the names of the registered dealers then the claim of the assessee will be allowed, will stand. 11.. On the facts of this case, we direct that there shall be no ordor as to costs. Appendix I [The judgment of the Division Bench of the Bombay High Court consisting of D.P. MADON and M.H. KANIA, JJ., in Century Spinning and Manufacturing Company Ltd. v. State of Maharashtra (Sales Tax Reference No. 2 of 1969 decided on 31st January, 1975) is printed below: ] CENTURY SPINNING AND MANUFACTURING COMPANY LIMITED V. STATE OF MAHARASHTRA MADON, J.-This is a reference under section 34(1) of the Bombay Sales Tax Act, 1953, made at the instance of the assessee in which the following two questions have been referred to us: "(1) Whether, on the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling dealer a certificate in form K or L, as the case may be, in respect of the goods purchased by the licensee. The certificates in the said form K or L furnished by the licensee shall be serially numbered by him in chronological order and the licensee shall keep and produce before the Collector or the assessing authority, if so required, mechanically duplicated (or carbon) copies of such certificates duly signed and dated. 7.. The licensee may for the purpose of paragraph 6 of this licence nominate any person to sign certificates on his behalf in respect of goods purchased by the licensee under this licence and the name and signature of the person so nominated shall be entered in the statement appended to this licence. 8.. The licensee or any person nominated by him under paragraph 7 of this licence shall produce this licence for the inspection of any dealer from whom he purchases any goods under this licence or for the inspection of the manager or agent of such dealer whenever required to do so." We have had occasion to consider the effect of the first proviso to section 9 of the said Act and the aforesaid conditions of the licence in Sales Tax Reference No. 15 of 1970-Messr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and other documents in support of his claim. The burden of proof, therefore, of showing that the aforesaid turnover of Rs. 4,09,040 was exempted from tax by reason of the first proviso to section 9 of the said Act lay upon the applicants. The provision of the said rule 17 that a dealer claiming exemption was on demand to produce any bills, cash memoranda, accounts and other documents in support of his claim has been expressly inserted in order to enable the department to compel the dealer to produce such documentary evidence which may go either to substantiate his case or repel it and in order to determine whether the exemption claimed should be granted to him and whether the dealer had discharged the burden of proof resting upon him. In the present case we find from the record that the applicants have made no attempt whatsoever to prove that Sathe and Pandya or either of them were persons nominated as required by clause (7) of the licence issued to Messrs. Arun Trading Company; except, when the matter was being argued before the Tribunal, to call upon the additional Government agent who was appearing on behalf of the State to produce the record of Messrs. Arun Trading Company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule requires is that when a dealer holding a licence or an authorisation has made a nomination, he is within seven days from the date of such nomination to send an intimation to the Collector in form NAA specifying the date of such nomination and the full name and address of the nominee and containing three specimens of the nominee's signature which he intends to use for signing certificates. Thus, by this rule an additional obligation was cast upon the licensee to give intimation within the specified period to the Collector of the nomination made by him and to furnish to the Collector the other particulars required by the rule. The absence of such a rule during the period of assessment did not mean that a person not nominated as required by condition 7 of the licence could validly sign a certificate in form K. It was next submitted by Mr. Joshi on behalf of the applicants that by virtue of the fact that Sathe and Pandya have both signed the said certificates as managers of Messrs. Arun Trading Company, it must be presumed that both of them were managers as contemplated by section 24 of the said Act. The said section 24 provides as follows: "Dealer to declare the name of manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther of them were declared to the department as being the managers under section 24 of the said Act, to our mind this fact would make no difference to the position. The manager under the said section 24 is there to see that the provisions of the Act are complied with. He is not there for the purposes of signing certificates and other documents. There are several provisions of the Act which are mandatory and the object in enacting the said section 24 was to see that there should be a person in the case of a dealer who is not a sole trader who would be responsible for complying with those provisions. The provisions about giving a certificate under the first proviso to section 9 is not a mandatory provision which a dealer is under any obligation to do. If the dealer chooses to purchase goods for a certain purpose and to avoid paying to his vendor the amount of tax, which but for such certificate the vendor would be assessed to, he gives to the vendor a certificate in form K. There is also no mandatory compulsion upon a dealer, who is a licensee, to nominate any person under condition 7 of the licence. The said condition expressly states that "The licensee may .................. nomina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from this judgment and order of the Tribunal. Mr. Cooper, the learned counsel for the department, has sought to contend before us that the Tribunal was not entitled to compare the signatures made on behalf of Messrs. J. Maneklal and Co. on the purchase vouchers with the signatures on the returns filed by Messrs. J. Maneklal and Co. We find that there is no substance whatever in this contention. The returns of Messrs. J. Maneklal and Co., the signatures on which have been compared with the signatures on the purchase vouchers, have been produced before the Tribunal by Mr. Damle, who appeared for the department. It is true that from the judgment of the Tribunal it does appear that after the signatures were compared by the Tribunal and found to tally, Mr. Damle did object that the signatures on the purchase vouchers could not be compared with the signatures on the returns, unless the party was produced. Such an objection was, however, without any substance and has been rightly rejected by the Tribunal. The returns were produced by Mr. Damle himself and could have been produced only for the purpose of comparison of signatures. It was not thereafter open to Mr. Damle to object to such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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