TMI Blog1984 (12) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... 959 (in form 16) by not reselling the said cotton. The matter was taken by the respondent-assessee up to the Tribunal. The Tribunal has ultimately come to the conclusion that there was no contravention of the certificate in form 16 given by the respondent-assessee in the circumstances of the present case. From this decision of the Tribunal the following question has been referred to us under section 61(1) of the Bombay Sales Tax Act, 1959: "Whether on the facts and in the circumstances of the case, and on a true and correct interpretation of section 14 of the Bombay Sales Tax Act, 1959 the Tribunal was justified in holding that no purchase tax under the said section was leviable on the purchase price of the cotton purchased on form 16 and which was destroyed in fire?" 3.. In the case of Sales Tax Reference No. 20 of 1980 the respondent M/s. Laljee Poonshi and Company is a licensed dealer in castor oil. For the assessment period 31st October, 1970 to 19th October, 1971 (Samvat Year 2027) the assessee purchased castor oil for resale or export on furnishing certificates, inter alia, in form 16. Most of the oil which was so purchased by the assessee was resold or exported during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground of contravention of the declaration given by the assessee in form 16. This matter was also taken by the assessee ultimately up to the Tribunal. The Tribunal came to the conclusion that in respect of this quantity of castor oil the assessee had not contravened the declaration given in form 16. From this decision of the Tribunal the present reference has come before us under the provisions of section 61(1) of the Bombay Sales Tax Act, 1959. The question referred to us in Sales Tax Reference No. 20 of 1980 and Sales Tax Reference No. 21 of 1980 is a common question to the following effect: "Whether on the facts and in the circumstances of the case, and on a true interpretation of section 14 of the Bombay Sales Tax Act, 1959 the Tribunal was justified in holding that no purchase tax under the said section was leviable on that part of purchase price of castor oil purchased on form 16 but not resold as it was lost by sticking to the containers or falling out in drops during the process of resale or export?" 6.. We have therefore to consider whether purchase tax under section 14 of the Bombay Sales Tax Act, 1959 is attracted in the circumstances set out above. For the sake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les by a registered dealer to other registered dealers exceeds fifty thousand rupees, he may apply for a licence under the Bombay Sales Tax Act, 1959. A licensed dealer therefore carries on the activity of reselling on a large scale. In order to avoid incidence of tax on all transactions of sale and resale of the same goods, a provision is made for giving of various declarations, certificates, etc., by the dealer in order to avoid repeated taxation of the same goods. 10.. Under the Bombay Sales Tax Act, 1959 a tax is not levied on every transaction of sale. The Act provides, inter alia, for the levy of sales tax and general sales tax. Sales tax is levied normally at the stage of the first sale while general sales tax is levied at the stage of the last sale of goods. Sales tax and general sales tax are levied on goods which are specified under the Act in various schedules. Cotton falls under the second part of Schedule B to the Bombay Sales Tax Act, 1959. Castor oil falls under Part I of Schedule D. Both are liable to general sales tax. 11.. Section 7 of the Bombay Sales Tax Act, 1959 deals with a single point levy of sales tax or general sales tax on declared goods. Under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase, to his own place of business outside the State.................... (b) * * * (1A) to a recognised dealer, who certifies in the prescribed form- (a) * * * (b) that they (goods) are purchased by him for use by him within the State in the manufacture of taxable goods which will in fact be sold by him (2) to a commission agent holding a permit who certifies in the prescribed form- (a) * * * (b) that the goods are purchased by him as commission agent for his principal who is, (i) * * * (ii) a dealer whose place of business is outside the State and who is registered under the Central Sales Tax Act, 1956 and that the goods will be sold or will be used in the manufacture of goods for sale outside the State by the principal..............then on such sale of goods, the dealer shall be liable to pay a sales tax at the rate of................." (a reduced rate). 17.. The certificates which are to be given under section 11 of the Bombay Sales Tax Act, 1959 are to be given in the forms which are prescribed in the Bombay Sales Tax Rules, 1959. The certificate to be given under section 11(1) must be in form 14-1. The certificate under section 11(1A) is required to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II of Schedule D purchased by him are intended for resale by him." Thus, a deduction from the turnover of sales as prescribed inter alia in sections 7 and 9 will not be granted unless a certificate as set out in section 12 is produced by the dealer concerned. The certificate required to be submitted under section 12(a) is in form 14, a certificate under section 12(c) is required to be in form 16, a certificate under section 12(d) is required to be in form 17 and a certificate under section 12(e) is required to be in form 16A. We are concerned in the present case with the provisions of section 12(c) and the certificate in form 16 given by the assessee. 18.. As a result, on the requisite certificate being furnished under section 12 by the dealer concerned, he is not required to pay tax on the sale in respect of which such a certificate is furnished. If however, the purchaser who has furnished the certificate commits a breach of the certificate, then under section 14 of the Bombay Sales Tax Act, 1959 a purchase tax is payable by the purchaser who contravenes the certificate so given. 19.. In the light of this background if we examine the provisions of section 14, it is clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary to such certificates the goods are used for another purpose" etc., do not convey anything more than the fact that the certificate is contravened by reasons of the goods being used for another purpose, etc. Since the certificates are of different types, the various contraventions are set out in section 14. In case of these certificates, therefore there is no difficulty in interpreting the phrase "contrary to such certificate", as merely denoting a contravention, e.g., goods being used for another purpose, goods not being resold, goods not being despatched as per the certificate, or within the prescribed period. 20.. In the case, however, of a certificate given by a licensed dealer under section 12(c) which is in form 16, the language used in the certificate is somewhat different. Under section 12(c) the licensed dealer has to certify in the prescribed form that the goods are intended for resale by him otherwise than in the course of inter-State trade or commerce or export out of the territory of India. In the alternative a licensed dealer is entitled to a deduction, if he certifies in the prescribed form that the goods are intended for resale by him in the course of inter-S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific variety of contravention-whether it is change of intention or anything, etc. 22.. There are also other difficulties if we accept the contention of Mr. Patel that a contravention of the certificate in form 16 can occur only in cases where the dealer concerned by his own volition changes his intention. If intention is taken as a subjective desire on the part of the dealer concerned to act in a certain manner, then it becomes extremely difficult to ascertain when a contravention of a certificate in form 16 occurs. At the time when the certificate is given the dealer concerned can always be said to have this subjective desire to carry out the terms of the certificate. If at any subsequent date he acts contrary to the terms of the certificate the dealer may, in a number of cases, be able to prevent a purchase tax being levied by pleading that though he has acted contrary to the certificate his intention or his desire has always been to carry out the terms of the certificate. For example, he may say that although he desired to resell the goods, he could not find any buyer; or he may say that although he desired to resell the goods, such a sale was not commercially viable; or h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed a somewhat different language. Under the old form 16 the licensed dealer giving a certificate under the old section 12(c) had to certify that the goods purchased by him "will be resold within the State of Maharashtra and otherwise than in the course of inter-State trade or commerce or export out of the territory of India by me...............". The certificate in the old form 16 made no reference to any intention. After the amendment of section 12(c), however, in 1962 a new form 16 has been prescribed which reproduces the exact language of new section 12(c). The new form 16 therefore requires a licensed dealer to certify that he intends to resale the goods, etc., as prescribed in that certificate. 25.. What significance should be attached to this change in the language of form 16? The language of the material part of section 12(c) has remained the same. As far as the new form 16 is concerned, it has merely reproduced the language of the new section 12(c). When the new form simply reproduces the language of the relevant part of the new section in the same manner as other forms reproduced the language of the relevant parts of other sections, nothing more can be read into such ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The form of the certificate was in form J which was prescribed under the Bombay Sales Tax Registration and Turnover Rules of 1954. Form J reproduced the language of section 8. The certificate required to be given by such a dealer had to state that the goods in question "are intended for being sold by me..............or registered dealers to whom I sell...............the goods in the course of inter-State trade or commerce or in the course of export of the goods outside the territory of India................". 27.. Section 10 of the 1953 Act related to the levy of purchase tax. The relevant parts of section 10 were as follows: "10. Levy of purchase tax.-Subject to the provisions of section 7, there shall be levied a purchase tax on the turnover of purchases of goods specified in column 1 of Schedule B, at the rates, if any, specified against such goods in column 4 of the said Schedule,- (a) * * * (b) where a certificate under clause (b) of section 8 has been furnished in respect of such goods and the purchasing dealer does not show to the satisfaction of the Collector that the goods have been despatched by him or by a person to whom he has sold the goods to an address outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-existence of the intention will have to be judged from the conduct of the assessee. If the assessee has dealt with the goods, in such a manner that the goods cannot be resold, for example, his conduct will indicate that his intention to resell the goods has been abandoned. Hence Mr. Patel wants to add a further submission that the failure to resell must be on account of some voluntary act on the part of the assessee. If we assume the submission of Mr. Patel to be correct, there can be several instances where the assessee is not able to resell the goods, not because of his own conduct, but on account of extraneous circumstances. For example his inability to find a buyer would be something other than the voluntary act of the assessee. Similarly a change in the market conditions would be something other than the voluntary act of the assessee. In all such contingencies the assessee, although he has not resold the goods, will be able to submit that he has not contravened the certificate because he continues to hold the intention to resell. Such an interpretation would lead to absurd results. 30.. The same submission can be examined from a slightly different point of view. We will t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, Licence Circle, Bombay v. Daulatram Rameshwarlal reported in [1960] 11 STC 757 (SC). In the case before the Supreme Court interpretation of section 10(b) of the Bombay Sales Tax Act, 1953 was in dispute. Under section 8(b) a deduction from the turnover of sales is permissible (inter alia) when the goods are sold by an authorised dealer to a registered dealer for being despatched outside the State. In the corresponding provisions of section 10(b) dealing with a contravention of a certificate under section 8(b), purchase tax became leviable on the dealer's failure to show that the person to whom he had sold the goods had not despatched the goods outside the State. The dispute related to the meaning of the word "person" used in section 10(b). The Supreme Court held that reading section 10(b) in the light of section 8(b), the term "person" referred to a registered dealer and not to any person. In the case before the Supreme Court the goods were in fact despatched outside the State within the prescribed time but they were not despatched by a registered dealer and hence the question relating to the interpretation of section 10(b) arose. One of the arguments before the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n given by the Gujarat High Court to the language of the undertaking given by the licensed dealer. The certificate does not contain any statement relating to the present desires of the licensed dealer. It contains a statement relating to the manner in which the goods are to be utilised in future by the dealer who has given the certificate. There can therefore be no question of the dealer still intending to sell the goods when he is unable to carry out his intention. We would like to point out that once the goods have been destroyed by fire there can be no question of the dealer still intending to resell the goods. The goods have been destroyed. With the destruction of the goods, such intention as the dealer had in connection with the goods has also come to an end. 34.. In our view the pharse "goods are intended for resale" used in section 12(c) does not refer to any subjective state of mind of the licensed dealer. They refer to the purpose for which the goods are purchased by the licensed dealer. Similarly the words "contrary to such certificate" in section 14(1) of the Bombay Sales Tax Act, 1959 have to be read along with words which follow describing the manner in which a certi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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