TMI Blog1997 (12) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers at Andhra Pradesh furnished "C" forms for the purchases effected by them issued to other dealers, in rather a bid to avoid the tax being paid on local sales effected by them. In other words, the purchasing dealers were stated to have misused "C" forms issued to the other dealers in effecting inter-State purchases from the assessee-dealers. 4.. The assessing officer therefore revised the assessment orders under section 16 of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act No. 1 of 1959) (for short "the TNGSTA") and subjected the inter-State sales turnover exigible to tax at the appropriate rate and thereby deprived the assessee-dealers of the concessional rate of tax. 5.. The turnovers refixed by the assessing officer for the various assessment years are as below: Assessment year Turnover determined Rs. 1981-82 62,29,518 1982-83 59,13,138 1983-84 61,58,725 1985-86 88,70,251 6.. The aggrieved assessee-dealers filed appeals before the Appellate Assistant Commissioner (CT) III, Madras-108 and the appeals so filed ended in dismal failure. 7.. The matter did not stop there. The assessee-dealers further filed appeals before the Tamil Nadu Sales Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplies the goods he incurs a penalty under section 10. That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer." (ii) In Hukum Chand Shyam Lal v. Union of India AIR 1976 SC 789, what their Lordships of the Supreme Court said, as relatable to the exercise of power by certain authorities in a certain way in paragraph 18 (at page 794) is relevant for our present purpose and it reads as under: "18. It is well-settled that where a power is required to be exercised by a certain authority in a certain way, it should be exercised in that manner or not at all, and all other modes of performance are necessarily forbidden. It is all the more necessary to observe this rule where power is of a drastic nature and its exercise in a mode other than the one provided, will be violative of the fundamental principles of natural justice................" (iii) In Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax [1978] 41 STC 409 (SC) what their Lordships of the Supreme Court said in the paragraph at pages 419-420 is relevant and the same reads as under: "But what would be the position if the purchasing dealer does not act according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchasing dealer and he shall continue to have his deduction, but the price of the goods purchased shall be included in the taxable turnover of the purchasing dealer. The second proviso is thus intended to provide the consequence of the purchasing dealer not complying with the statement of intention expressed in the declaration given by him to the selling dealer under the first proviso. This is broadly the scheme and intendment of section 5(2)(a)(ii) and its two provisos read in the context of the other provisions of the Act." (iv). In United Steel Allied Industries v. State of Andhra Pradesh [1988] 70 STC 114 (AP), during the years 1971-72, 1972-73 and 1973-74, the revision-petitioner made certain sales in the course of inter-State trade to dealers in Bombay, who issued "C" forms in respect of the sales. At the time of assessment, the petitioner filed the "C" forms and claimed the concessional rate of tax under the Central Sales Tax Act. (a) The Commercial Tax Officer, however, subjected some of the sales to tax at ten per cent, on the ground that the certificate of registration of the purchasing dealers in those cases had been cancelled much before the sales were effected, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 [for short "the CST (R T) Rules "] provides that if the certificate of registration of a dealer is cancelled, he shall forthwith surrender to the notified authority the certificate of registration and copies thereof, if any, granted to him. If the purchasing dealer is in possession of the registration certificate, it is prima facie evidence of the certificate not having been cancelled. A selling dealer cannot be expected, in addition to pursuing his trade, to investigate, every time a sale is effected, the antecedents and the genuineness of the purchasing dealer's credentials. The selling dealer is entitled to act on prima facie material at the time of effecting the sales. (v) In Deputy Commissioner of Sales Tax (Law) v. Debi Prasad Shyam Sunder Sons [1991] 82 STC 305 (Ker), the respondent-firm was a registered dealer under the Kerala General Sales Tax Act, 1963 (for short "the KGSTA"). The assessment year in question was 1983-84. Amongst others, the assessing authority disallowed the exemption to the turnover of Rs. 14,25,172.78 relating to the sale of pepper and betel-nuts to four other registered dealers in Mattancherry. The said goods are taxable at the last purchase poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the certificates of registration of the purchasing dealers were cancelled with retrospective effect cannot in any manner act to the prejudice of the assessee, who bona fide obtained form No. 25 declarations as soon as the various transactions took place. It was found that all the purchasing dealers were having registration under the Kerala General Sales Tax Act, 1963, when the disputed sales were effected. The registration of the purchasing dealers were subsequently cancelled. There is no material that at the time when the assessee sold the goods to the said purchasers, as against form No. 25 declarations, there was any proceeding against the said purchasers. (e) In the light of the above facts, the Sales Tax Appellate Tribunal held that exemption cannot be disallowed and the assessee is entitled to the exemption claimed by them, being not the last purchaser of the goods taxable at the last purchase point. (f) It is thereafter, the Revenue has filed tax revision case before the Kerala High Court assailing the order passed by the Sales Tax Appellate Tribunal dated February 13, 1990. (g) What their Lordships of the division Bench of the Kerala High Court, in such context, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner [1972] 30 STC 85 (Delhi), (3) Devinder Kumar Kewal Kumar v. State [1972] 30 STC 352 (P H), (4) Commercial Tax Officer v. Jasodalal Ghosal Private Ltd. [1979] 44 STC 31 (Cal) and (5) Suresh Trading Company v. State of Maharashtra [1981] 48 STC 207 (Bom)." (vi) In Commissioner of Sales Tax, New Delhi v. Hari Ram Oil Co. [1992] 87 STC 493 (Delhi), the dealer had obtained declarations from two purchasers and sought the benefit of exemption from sales tax in his return. The assessing authority, however, found that the registration certificate of M/s. Narender Kumar Krishan Kumar had been cancelled with effect from April 1, 1973, while the registration certificate of M/s. Sunrise Lubricants had been cancelled with effect from October 15, 1973. (a) The assessing authority came to the conclusion that the dealer was not entitled to the benefit of the sales made to the said purchasers because their registration certificates had been cancelled and the sales made by the dealer could not be regarded as sales having been made to the registered dealers. It may here be stated that the sales made by the dealer in favour of M/s. Narender Kumar Krishan Kumar were after 1st April, 1973, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible after the same has been made be published in the official gazette. It has been held by a division Bench of the Andhra Pradesh High Court in the case of Yemmiganur Spinning Mills [1976] 37 STC 314, that the notification of cancellation of registration would be effective and enforceable only with effect from the date of its publication in the gazette. Similarly, a single Bench of the Punjab and Haryana High Court in Arjan Radio House's case [1973] 31 STC 49 came to the conclusion that if the selling dealer is not aware of the cancellation of the registration certificate because of the non-publication about the same in the official gazette then he cannot be deprived of the benefit of the declarations received by him. It appears to us that the intention of the Legislature in promulgating rule 12 clearly was that the factum of cancellation of registration must be made known to the whole world. It is only for this reason that the rule requires publication about the cancellation in the official gazette. Such publication is always regarded as information to the world at large. Once the factum about the cancellation of the registration is published thereafter no dealer can plead that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the subordinate legislation itself prescribes the manner of publication, such a mode of publication may be sufficient, if reasonable. If the subordinate legislation does not prescribe the mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect only when it is published through the customarily recognised official channel, namely, the Official Gazette or some other reasonable mode of publication." 11.. Coming to the facts of the instant case, there is no pale of controversy that the Andhra Pradesh dealers, who effected purchases from the assessee-dealers are registered dealers, who had been actually dealing in business at the time of the impugned transactions. It is also not in dispute that "C" forms furnished by the said registered dealers of Andhra Pradesh were "C" forms of certain other registered dealers, who were stated to have surrendered those "C" forms to the concerned authority after the closure of their business. 12.. Both the Central Sales Tax (Tamil Nadu) Rules, 1957 [for short, "the CST (T) Rules"] and the Central Sales Tax (Andhra Pradesh) Rules, 1957 [for short, "the CST (AP) Rules"] contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done by all the authorities, inclusive of the Tribunal. 15.. At the same time, the fact that no material is traceable to the file as to the publication made in that regard in the Gazette of the Andhra Pradesh Government, nor is there any material traceable to the file as to any intimation in that regard having been sent by the State of Andhra Pradesh to the State Government of Tamil Nadu is not by itself sufficient to come to the conclusion that in fact a publication in the Gazette of Andhra Pradesh Government or due intimation of that fact to the State Government of Tamil Nadu had not been published or made. If a publication in that regard is made and an intimation had also been sent in that regard to the State Government of Tamil Nadu so as to enable it to make a publication in its Gazette, it goes without saying that in such an eventuality, it is an information to the world at large, inclusive of the assesseedealers. Therefore, publication of such factors in the Gazette of the Andhra Pradesh or due intimation to the State Government of Tamil Nadu is a crucial factor as to the entitlement or otherwise of the concessional rate of tax of the assessee-dealers. In such state of aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. Therefore, we are of the view that in order to avoid large scale misuse of "C" forms, it would be desirable to fill up various columns as stated above of the first part of "C" forms to be filled up by the issuing authority in indelible ink, so that the obliteration process, if resorted to, would be difficult, if not impossible. For the particulars to be furnished by the purchasing dealer in the certificate the purchasing dealer alone would be liable either by way of prosecution under section 10 of CSTA or by way of mulcting of penalty, in lieu of prosecution under section 10-A of CSTA. 18.. A fraud had been perpetrated in the instant cases, in the sense of misuse of "C" forms belonging to other dealers as those "C" forms had been issued to the purchasing dealers by the issuing authorities, without filing various columns in the first part of "C" forms. 19.. In fine, all the tax case (revisions) are allowed, the orders of the tax authorities, inclusive of the Tribunal below are set aside and all the matters are remitted back to the assessing officer for a fresh look in the matter, in the manner, as indicated above. No costs. Petition allowed. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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