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TMI Blog2017 (3) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case, the Tribunal erred in confirming the disallowances under Rule 44 of the Gujarat Sales Tax Rules, 1970, since the purchases were made by the appellant from a party, who in turn had purchased it from a dealer whose registration at the relevant time was valid, only on the ground that subsequently such registration was canceled with retrospective effect?" [2.0] Facts leading to the present Tax Appeal in nutshell are as under: [2.1] That the appellant herein - M/s. Isaan Overseas Ltd. (hereinafter after referred to as "purchaser") was running business of reselling as well as exporting castor oil. That during the course of interState sale it purchased the goods from 5 dealers viz. (1) Virkrupa Trading Company, (2) Uma Trading Company, (3) New Bhumi Enterprise, (4) Urvil Sales Corporation and (5) Urvil Exim Ltd., Ahmedabad. That the purchaser claimed the set off under Rule 44 of the Rules, 1970 for the purchase from the aforesaid dealers for the sum of Rs. 29,55,25,210/-. That the purchaser also produced Form 40. The said claim of set off came to be adjudicated upon by the Assessing Officer. The Assessing Officer found that as originally from whom the aforesaid s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (3) New Bhumi Enterprise for the sum of Rs. 12,62,84,840/-, the purchaser has preferred the present Appeal to consider the aforesaid question of law. [3.0] In the facts and circumstances of the case and looking to the controversy in the appeal which goes to the root of the matter, the following additional substantial question of law is framed. "Whether submitting Form 40 signed by the dealer can be said to be conclusive proof of payment of tax by the dealer, while claiming the set off under Rule 44 of the Rules, 1970 and whether on submitting Form 40 by the purchaser, who claimed set off the onus is thereafter upon the Assessing Officer to hold inquiry whether the tax of which the set off is claimed under Rule 44 of the Rules, 1970 has been deposited in the government by the dealer or not?" [4.0] Shri Dipen Desai, learned Advocate has appeared on behalf of the appellant - purchaser and Shri Hardik Vora, learned Assistant Government Pleader has appeared on behalf of the respondent State. [5.0] Shri Desai, learned Advocate appearing on behalf of the appellant has vehemently submitted that in the facts and circumstances of the case the learned Tribunal has materially erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) Urvil Sales Corporation and (5) Urvil Exim Ltd., who purchased the goods from one Shreeji Agro. It is submitted that the purchaser submitted Form 40 signed by the dealers from whom the purchaser purchased the goods during interState sale. It is submitted that merely because subsequently the registration of the original dealer i.e. in the present case Shreeji Agro came to be canceled ab initio, the subsequent purchaser cannot be denied the set off solely on the aforesaid ground i.e. on the ground that the registration of the original dealer has been canceled subsequently ab initio. In support of his above submissions, he has heavily relied upon the decision of the Hon'ble Supreme Court in the case of State of Maharashtra vs. Suresh Trading Company reported in (1997) 11 SCC 378. [5.3] It is further submitted by Shri Desai, learned Advocate appearing on behalf of the appellant that even otherwise considering the language used in Rule 44, when the purchaser submits the Form 40 signed by the dealer, there is a presumption that the tax on the transaction on which the set off is claimed by the dealer, the same can be said to be conclusive proof of payment of tax by the dealer. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchaser is not entitled to any refund and/or set off under Rule 44 of the Rules, 1970. [6.2] Now, so far as the submission on behalf of the purchaser that Form 40 can be said to be conclusive proof and therefore, on furnishing / submitting Form 40, the purchaser has discharged its onus and therefore, automatically on furnishing Form 40 the purchaser is entitled to the set off claimed is concerned, it is vehemently submitted that language used in Rule 44 is very clear. It is submitted that as per Rule 44, twin conditions are required to be fulfilled viz. the assessee has to prove to the satisfaction of the adjudicating Authority / Commissioner that the tax has been paid by the original dealer and that the assessee is required to produce certificate in Form 40 issued by the dealer. [6.3] It is submitted that even in Form 40 the words used are, "tax paid paid / will be paid". It is submitted that if in Rule 40 the word used are "tax will be paid" in that case, the submission of Form 40 cannot be said to be conclusive proof of payment of tax by the original dealer. It is submitted that therefore, considering Rule 44 of the Rules, 1970, burden is upon the claimant / purchaser who cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue and against the purchaser. [7.0] Heard learned Counsel appearing for respective parties at length. The short question which is posed for consideration of this Court is whether while claiming the set off under Rule 44 of the Rules, 1970, Form No.40 signed by the dealer, produced by the purchaser can be said to be conclusive proof of payment of tax by the dealer? While considering the aforesaid question, Rule 44 of the Rules, 1970 is required to be referred to, which reads as under: "44. Drawback, setOff or refund of tax or the purchases of goods sold in the course of InterState trade or commerce, or of export out of the territory of India or transported to a place outside the State of Gujarat. In assessing the tax payable by a Registered dealer (hereinafter referred to as the "assessee") the Commissioner shall, subject to the general conditions of rule 47, and further conditions specified below, grant him a drawback, setoff or as the case may be refund, or the whole or any part of the tax in respect of the purchases of goods sold in the course of interState trade or commerce or of export out of the territory of India or transported to a place outside the State of Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of sales tax or of general sales tax (whichever has not been recovered separately), applicable to the respective goods under the Act, at the relevant time of purchase thereof) : PROVIDED that the assessee proves to the satisfaction of the Commissioner that the relevant tax leviable under the Act has been paid or has become payable on an earlier transaction in the same goods and produces a certificate in Form 40 issued by the dealer from whom such goods were purchased by the assessee, stating inter alia that the sale of the same goods has been or will be included in his turnover of sales and the amount of tax payable, if any, by him under the Act, on such turnover has been or as the case may be, will be paid within the time laid down in rule 31. (ii) The amount of sales tax alone recovered separately on the purchases of goods described in Schedule III against a certificate in Form 17 under item (ii) of subclause (A) of subsection (1) of section 13 of the Act. (iii) The amount of purchase tax paid or payable under section 15 or 16 of the Act : PROVIDED that the aggregate of the amounts, if any, calculated in accordance with the clause (A) and (B) above, shall be granted to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in memo invoice number ............... date ................... and said/to Shri Messrs ............... holding certificate of Registration Number .................... dated ........... without obtaining from him /them any of then certificate prescribed under rules 24 of the Gujarat Sales Tax Act. 1970 or any of the certificates prescribed under any of the notification issued section 49 of the Act. have been will be included by me/ the said. ............(firm, company etc.) in the turnover of sales on which the amount of tax payable if any , in accordance which section 7,8 or 10 of the Gujarat Sales Tax Act. 1969 has been/will be paid within the time specified in rules 31. Place ............................. Dated ............................ Signature ........................ Status .............................." [7.1] Thus, considering the proviso to Rule 44 of the Rules, 1970, if the assessee proves to the satisfaction of the Commissioner that the relevant tax leviable under the Act has been paid or has become payable on an earlier transaction on the same goods and produces a certificate in Form 40 issued by the dealer from whom such goods were purchased by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the first Appellate Authority to verify whether the actual tax has been paid by the original dealer or not. However, the State has not preferred the appeal with respect to other two transactions for which the remand is made by the learned Tribunal. [8.0] In view of the above and for the reasons stated above, while holding that while claiming the set off under Rule 44, the assessee is required to satisfy the Commissioner by producing the relevant material to prove that actual tax has been paid by the original dealer and is also required to produce certificate in Form 40 issued/signed by the dealer from whom such goods were purchased by the assessee and only in case when the aforesaid twin conditions are satisfied, the assessee shall be entitled to the set off of the tax paid by the original dealer. However, as with respect to other two transactions the learned Tribunal has remanded the matter to the first Appellate Authority which according to the appellant are similar to that of other three transactions for which the learned Tribunal has rejected the appeal and the order with respect to other two transactions has attained the finality, we deem it fit to remand the matter to the ..... 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