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TMI Blog1992 (8) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal was right in law in holding that the applicant was not entitled to deduct under section 8(iii) of the Gujarat Sales Tax Act, 1969, from its turnover of sales, those sales which were effected to M/s. Lucky Trading Company against certificates in form 17 as allegedly signed by its proprietor Shri Govindram Samatmal as the licensed dealer, and for that purpose in holding that his signature in Hindi in the certificates could not be compared for want of material on record and also because his full signature in English did not tally with the material available on record? 3.. Whether, on the facts and in the circumstances of this case, the Tribunal was right in law in holding that the burden of proving. the claim for deduction of sales effected against certificates in form 17 under section 8(iii) of the Gujarat Sales Tax Act, 1969, to M/s. Lucky Trading Company was not discharged by the applicant? 4.. Whether, on the facts and in the circumstances of this case, the Tribunal was right in law in disallowing the applicant's claim for deduction on the basis of comparison of signatures adopted at the stage of the second appeal when no such basis was adopted by the lower authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner who had also confirmed the conclusion arrived at by the Sales Tax Officer on the grounds stated in the detailed orders. It was the view taken by the Assistant Commissioner, Sales Tax, that the assessee was not entitled to the deductions against form No. 17 as claimed by it. Anyhow, the penalty amount of Rs. 10,000 came to be reduced to an amount of Rs. 1,000 only. Against the abovesaid orders passed by the Assistant Commissioner, Sales Tax, in the first appeal, the assessee had approached the Tribunal by way of filing the second appeal. The second appeal filed by the assessee also came to be dismissed by the orders dated July 12, 1979. Later on the assessee had made necessary prayer for the reference of the abovesaid questions to this Court. As pointed out by us earlier, the last question has been referred by the Tribunal to this Court at the instance of the Revenue. 4.. As noticed above the case of the assessee was that during the period of assessment the total sales turnover were to the tune of Rs. 3,18,84,108 out of which the sales amounting to Rs. 19,04,914 were claimed against the declarations in form No. 17. Anyhow, the questions with which we are concerned woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Traders at the same premises at which the abovesaid two Lucky Trading Companies are carrying on the business was also found to be operating. This business was issued the registration certificate on April 2, 1971. Therefore, the Sales Tax Officer at the time of assessment had taken into consideration this eloquent feature of the case that three concerns in the name of M/s. Lucky Trading Company holding different registration certificates were trading which in the eye of law were independent of each other. It was also noticed with great pertinence at the time of the assessment that though the abovesaid three business were in the name and style of M/s. Lucky Trading Company, different persons used to run the business and that the business differed and that the proprietorship of the business also differed. 6.. At the time of hearing of the second appeal before the Tribunal, the Government agent had pointed out many infirmities due to which, according to the Revenue, no reliance could have been placed on the declarations in form No. 17 for claiming the deductions. It was pointed out before the Sales Tax Tribunal that the required procedural formalities were not complied with, form No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Therefore, form No. 7 and especially the conditions Nos. 5, 6 and 7 and the statement at Part I and Part II would go to show very clearly that with a view to make the procedure and formalities complete of form No. 7, various obligations have been cast, not only upon the licensed dealer but also upon the person who is being nominated to sign a certificate on behalf of the licensed dealer. Part I makes it obligatory on the licensed dealer to give or lodge with the department the specimen signature, while Part No. II makes it obligating both on the licensed dealer and the nominated person to carry out certain obligations. All these requirements have been inserted under form No. 7 with a dual purpose. They have been indeed imported in the Act and the Rules clearly with a view to have a fair deal with the assessee and the Revenue. The possibility of fraud being played at any juncture while claiming benefit against declarations in form No. 17 is clearly sought to be curbed. 9.. Form No. 10 and form No. 11 also merit a careful consideration at this juncture. Form No. 10 which is prescribed under rule 16 is in respect of furnishing of specimen signature. The licensed dealer is requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords. The case of the assessee can be divided or bifurcated in two parts. One is in respect of the declaration in form No. 17 allegedly signed by Govindram Samatmal. The second part of the case of the assessee relates to those deductions which are allegedly supported by form No. 17 signed by the person nominated by Govindram Samatmal, viz., Bhagwandas Hirumal. Out of the total sales which are under dispute amounting to Rs. 91,54,450 the deduction in respect of the amount of Rs. 2,39,844 is being claimed on the basis of form No. 17 allegedly signed by the nominee. The remaining amount of Rs. 6,94,606 is being claimed on the basis of the certificate in form No. 17 allegedly signed by Govindram Samatmal, the alleged proprietor of the business in the name and style of M/s. Lucky Trading Co. 12.. So far as the certificates in form No. 17 issued by Govindram Samatmal are concerned, the Tribunal has refused to recognise the same on the ground that though the licensed dealer was required to submit the form No. 10 along with his own specimen signature the same has not been done. It is also taken into consideration by the sales tax authorities that the residential address of Govindram Sama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax practitioner. The abovesaid application thus could not have served any purpose for comparison of the signatures. The specimen signature given to the abovesaid banks differed from the specimen signature given to the remaining bank. Therefore, even on the basis of the material produced by the assessee before the Tribunal, the purpose was not served. Anyhow, the fact had remained that for the abovesaid two banks, Govindram Samatmal had signed the application forms for opening of the accounts in English script while the specimen signature lodged with the bank for the operation of the account was in Hindi. That takes us to the declaration in form No. 17 on the basis of which the assessee wanted to claim the deductions. By way of comparison of the signatures, it was noticed that the signature of form No. 17 had already with the specimen signature given for operating the accounts with the Central Bank of India and Bombay Mercantile Co-operative Bank. Because of this comparison, it was strenuously urged by the assessee before the Tribunal and before us also that declarations in form No. 17 which have been signed by the dealer Govindram Samatmal should have been accepted without any h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indram Samatmal should have been accepted for the purpose of granting the deduction. 13.. The Tribunal has made a reference to two decisions on the basis of which it can be said that the case of the assessee on the basis of the exercise of comparison of the signatures could not have been accepted. The Tribunal has made a reference firstly to the Bombay High Court decision in New Prahlad Mills v. State of Maharashtra [1975] 35 STC 352. As done by the Tribunal, we would also prefer to quote the observations of the Bombay High Court in the above said case which run thus: "The requirement that the certificate in form K to the Bombay Sales Tax (Registration, Licensing and Authorisation) Rules, 1954, should be signed by the purchasing dealer himself or by a person nominated by him as provided for in para 7 of form F issued to the purchasing dealer is neither a mere formality nor an inconsequential matter of routine, but a matter vital to the very validity of the certificate. Therefore, an assessee would not be entitled to claim exemption under the first proviso to section 9 of the Bombay Sales Tax Act, 1953, of sales to a dealer holding a licence, if the certificates in form K issued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an unscrupulous assessee to claim the deductions against form No. 17 on the basis of a claim which may not be termed as a well founded one. At the same time if these provisions are not to be strictly applied, it would create hindrance and difficulties not only in the way of the Revenue but also in the way of the assessee and other persons like licensed dealers. 16.. Because of this position, we are not inclined to accept the contention raised by Mr. Pathak that on the basis of the comparison of the signatures as indicated above, the case of the assessee could have been accepted. Anyhow, as it becomes clear we have also examined the material which was appeared before the sales tax authorities with a view to satisfy ourselves that the view taken by the Tribunal is not an erroneous one. The only conclusion which would fall from the abovesaid is that the declarations in form No. 17 allegedly signed by Govindram Samatmal could not have been accepted and recognised by the Tribunal for awarding or granting the deduction. 17.. So far as the declaration allegedly given by the alleged nominee Bhagwandas Hirumal is concerned, the same difficulties would come in the way of the assessee. It s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in by the assessee in a shape of compared signatures. Miss Doshit was required to raise the abovesaid contention before us looking to the fact that though the sales tax authorities were duly satisfied that the procedural aspect of the case was not complied with by the assessee, the assessee was permitted to bring something before the Tribunal in the form of evidence. One has to agree with the contention raised by Miss Doshit in respect of the procedural formalities which we have pointed out earlier. Making a reference to the two decisions-one of the Bombay High Court (New Prahlad [1975] 35 STC 352) and the second one of the Supreme Court (Kedarnath Jute Manufacturing Co. Ltd. [1965] 16 STC 607), we have made it clear that the dual purpose of imposing strict requirement would be secured only by way of following those requirements without exception. If the statutory requirements were not complied with in the spirit and letter of the law, there was no scope for the assessee to urge before the sales tax authorities to permit them to bring some fresh material, with a view to support their claim before the sales tax authorities in respect of the deductions. The only question which was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity. 20.. The Orissa High Court's decision in Nowranglal Agarwala v. State of Orissa [1965] 16 STC 271 says very clearly that the declaration which states that the purchasing dealer is a registered dealer may be correct so far as the statement of fact is concerned, but it may not be correct so far as the question of law as to whether the purchasing dealer was validly registered is concerned. Here, as pointed out by us earlier, the question is in respect of the validity and legality of the alleged declaration in form No. 17 issued by Govindram Samatmal or his alleged nominees Bhagwandas Hirumal. In view of this it was open for the Tribunal to examine the question as to whether the abovesaid were the validly issued certificates. 21.. Mr. Pathak, the learned counsel for the assessee, has invited our attention to the Supreme Court decision in State of Kerala v. K.T. Shaduli Yusuff [1977] 39 STC 478. In that case as the facts would go to show the entries in the accounts of a third party were used to reject the accounts of the assessee and in making the best judgment assessment. The assessee's request for crossexamining the third party was denied. The question was in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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