TMI Blog2002 (2) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... n Entry of Goods into Local Areas Rules, 1993 (hereinafter referred to as "the Rules"). 2.. The facts necessary for disposal of the present case are like this. The State Government enacted BET Act for the purpose of collection of tax on entry of goods into local areas for consumption, use or sale. Section 3 of the BET Act is the charging section according to which a tax on entry of scheduled goods into a local area for consumption, use or sale therein shall be levied and collected at a rate not exceeding 5 percentum of the import value of such goods as may be specified by the State Government in the notification subject to such other conditions as may be prescribed. The State Government is also empowered under the said provision to provide rates for different scheduled goods for different local areas. Sub-section (2) of section 3 provides that the tax leviable under the BET Act shall be paid by every dealer liable to pay tax under the Bihar Finance Act or any other person who brings or causes to be brought into the local areas such scheduled goods whether on his own account or on account of his principal or takes delivery or is entitled to take delivery of such goods on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase bill, invoices or cash memos and other documentary evidences to the satisfaction of the said authority and a true and complete declaration in form ET-IX received from the selling dealer: Provided that one form of declaration shall not be valid for more than one transaction of sale unless all the transactions are of the same year and for less than one lac of rupees. (2)(a) Every registered dealer who makes first sale of the scheduled goods imported from any other local area or outside the State and by virtue of being the first importing dealer has paid tax thereon, shall issue to the purchasing dealer in addition to a cash memo or bill or invoice, a true and complete declaration in form ET-IX. The declaration shall be signed by the dealer or his declared manager. (b) Any other dealer making second or subsequent sale of such scheduled goods which has suffered the levy of tax and on which entry tax has been paid at the stage of first entry into a local area, shall issue to the purchasing dealer a declaration in form ET-IX as prescribed in clause (a). (3) The dealer shall maintain serially and chronologically a complete account in a register containing all particulars r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand submitted that under the provisions of the Act scheduled goods have to suffer entry tax only at the first point of entry into local areas. In other words, the registered dealer who makes the first sale of the scheduled goods has to pay tax. Any person claiming to be the subsequent dealer or importer and thus entitled to exemption from payment of entry tax is obliged to give evidence in support of the said claim. The registered importing dealer while making the sale at the first point is also required to issue a declaration in form ET-IX to the subsequent dealer and the subsequent dealer has to file the aforesaid form before the assessing authority as a proof of evidence for claiming exemption apart from the other document. The said provisions have been made to carry out the provisions of the Act to prevent fraud and collusion in attempt to evade tax and to facilitate administrative efficiency. The said provision is mandatory and not directory. If the said provision is interpreted to be directory then that will create a lot of confusion and uncertainty in the assessment matter. The dealer may produce different types of evidence which may be accepted or rejected and in case of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself provides for filing other evidences also including bills or invoices or cash memos, the requirement of form may be held to be directory because the assessing authority may feel satisfied on the basis of other materials also, with regard to claim of exemption. In this connection, he relied upon a judgment of the Supreme Court in the case of the State of Orissa v. M.A. Tulloch and Co. Ltd. reported in [1964] 15 STC 641. In that case, the subject for consideration was the provisions of section 5(2)(a)(ii) of the Orissa Sales Tax Act, 1947 and the rule 27(2) of the Orissa Sales Tax Rules, 1947 framed thereunder. According to provision of section 5(2)(a)(ii), a selling dealer is entitled to a deduction in respect of sales to a registered dealer of goods, if the goods are specified in the purchasing dealer's certificate of registration as being intended for resale by him in Orissa. Rule 27(2), inter alia, provided that a dealer who wishes to deduct from his gross turnover amount of a sale on the ground that he is entitled to deduction under sub-clause (ii) of clause (a) of subsection (2) of section 5 of the Act then apart from filing cash receipt or bill, etc., he would also be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision and also prevent fraud and collusion in an attempt to evade tax. It was held as follows: "There is an understandable reason for the stringency of the provisions. The object of section 5(2)(a)(ii) of the Act and the rules made thereunder is self-evident. While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will well nigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the twofold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section. The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steel were purchased by him in the same form from a registered dealer provided that a declaration in form XXIVC obtainable in the prescribed manner and duly signed by the selling registered dealer is furnished. In that case Kedarnath Jute Manufacturing Co. Ltd. [1965] 16 STC 607 was also referred to but that was distinguished on the ground that single point taxation which was compulsory under section 15(a) of the CST Act was not under consideration in Kedarnath Jute Manufacturing Co. Ltd. [1965] 16 STC 607 (SC). The Supreme Court held that the aforesaid provision was invalid as violative of article 14 of the Constitution. However, it considered subclause (vd) of section 5(2)(a) and relevant rules and held the same to be directory. The State of West Bengal did not file an appeal against the aforesaid judgment. However, one of the petitioners, namely, Calcutta Iron Merchants' Association filed appeal before the Supreme Court which is reported in [1997] 107 STC 556 (Calcutta Iron Merchants' Association v. Commissioner of Commercial Taxes) which has also been relied upon by the learned counsel for the petitioner. The apex Court did not go into the question of correctness of the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Kedarnath Jute Manufacturing Co. Ltd. [1965] 16 STC 607 and Prabhudayal Prem Narain [1988] 71 STC 1. 17.. In the case of Phool Chand Gupta v. State of Andhra Pradesh reported in [1997] 104 STC 601; (1997) 2 SCC 591, the question for consideration before the apex Court was whether the requirement of furnishing form C in terms of rule 12(3)(ii) of the Central Sales Tax (Andhra Pradesh) Rules, 1957, for claiming exemption was ultra vires of the Act and the Rules and also as to whether it was mandatory or directory. The apex Court held that section 13(3) confers wide powers on the State Government to make Rules to carry out the purpose of the Act provided the said rules are not inconsistent with the Act and the Rules framed by the Central Government in exercise of power conferred by sub-section (1) of section 13. It was further held that requirement of filing form C for claiming the benefit of exemption under section 6(2) did not run counter to the provisions of the Act or the Central Government, on the other hand the same was within the rule-making power of the State Government and to carry out the purposes of the Act. It was further held that the provision was mandatory an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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