UNION MEDICAL AGENCY Vs. STATE OF GUJARAT

JUDGEMENT

(1.) AN interesting question of law arises for our determination in this reference. The question is whether the expression "registered dealer" in clause (ii) of section 8 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as the "bombay Act"), bears the meaning that is assigned to it in sub-section (25) of section 2, which is the definition section, or whether the said expression is capable of bearing a different meaning in view of the subject and context in which it is used in clause (ii) of section 8 of the Act. The question arises in these circumstances : The assessees were at all material times dealers in spirit and alcohol and were registered as dealers under the Bombay Act. During the relevant assessment periods, namely, 1st January, 1960, to 31st March, 1963, the assessees had purchased goods from one Motibhai Gopalbhai Patel, who was carrying on business at Baroda and was at the relevant time a dealer registered under the Central Sales Tax Act, 1956 (hereinafter referred to as the "central Act" ). The said Motibhai Patel was, however, not registered as a dealer under the Bombay Act. During the course of proceedings for assessment to sales tax under the Bombay Act, the assessees claimed deduction from their turnover in respect of resales of goods purchased by them from the said Motibhai Patel. The claim for deduction was found on the provisions of clause (ii) of section 8 of the Bombay Act which in substance provides that resales of goods purchased by an assessee from a registered dealer shall be deducted from the turnover of sales of goods on which sales tax is leviable if certain conditions are fulfilled. The Sales Tax Officer rejected the claim of the assessees for such deduction on the ground that the said Motibhai Patel from whom the goods were purchased was not a registered dealer within the meaning of clause (ii) of section 8 in that he was not a dealer registered under the Bombay Act at the relevant time. The assessees carried the matter in appeal before the Assistant Commissioner of Sales Tax but the appeal was dismissed. The assessees thereupon preferred a second appeal before the Gujarat Sales Tax Tribunal (hereinafter referred to as the "tribunal"), but the Tribunal also dismissed the appeal holding that in order to claim deduction from the turnover of sales of goods under clause (ii) of section 8 of the Bombay Act, what was required to be shown was that the goods were purchased by the dealer on or after the appointed day from a "registered dealer" and in view of the definition of the said expression as contained in sub-section (25) of section 2 of the Bombay Act, such registered dealer must of necessity be a dealer registered under the Bombay Act. The Tribunal held that since the said Motibhai Patel from whom the assessees had purchased the goods in question was not a dealer registered under the Bombay Act, the requirements of clause (ii) of section 8 of the Bombay Act were not satisfied and the claim for deduction made by the assessees was not justified.

(2.) THE assessees thereupon made an application under section 61 of the Bombay Act requiring the Tribunal to refer to this court the question of law arising out of its order. THE Tribunal acceded to the request of the assessees and has stated a case in respect of the following question of law : " Whether for the purpose of allowing deduction from the turnover of sales under clause (ii) of section 8 of the Bombay Sales Tax Act, 1959, purchases of goods made by a dealer registered under the Bombay Sales Tax Act, 1959, from a dealer registered under the Central Sales Tax Act, 1956, but not registered under the Bombay Sales Tax Act, 1959, can be said to be purchases of goods made from the registered dealer within the meaning of clause (ii) of section 8 of the Bombay Sales Tax Act, 1959 ?"

(3.) THE Central Act was enacted to formulate principles for determining as to when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter-State trade or commerce and to declare certain goods to be of special importance in inter-State trade or commerce and specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods of special importance shall be subject. Clause (b) of section 2 of the Central Act defines the expression "dealer" to mean "any person who carries on the business of buying or selling goods, and includes a Government which carries on such business". "registered dealer" is defined in clause (f) to mean "a dealer who is registered under section 7". We shall presently refer to section 7. However, before we do so, it would be convenient to refer to section 6, which reads as under : " 6. (1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the official Gazette appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales effected by him in the course of inter-State trade or commerce during any year on and from the date so notified. (1-A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State. (2) Notwithstanding anything contained in sub-section (1) or subsection (1-A), where a sale in the course of inter-State trade or commerce of goods of the description referred to in sub-section (3) of section 8 - (a) has occasioned the movement of such goods from one State to another; or (b) has been effected by a transfer of documents of title to such goods during their movement from one State to another; any subsequent sale to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under this Act : Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased, containing the prescribed particulars. "