STATE OF GUJARAT Vs. DIAMOND OPTICAL MART

JUDGEMENT

(1.) THE Gujarat Sales Tax Tribunal by its judgment and order, dated 9th May, 1978, in Revision Application No. 36/77 remanded the matter to the Deputy Commissioner to ascertain the facts and pass suitable orders in the light of directions given by the Tribunal in its judgment. It also ordered the penalty imposed under section 36 (3) (a) of the Bombay Sales Tax Act, 1959, read with section 9 (2) of the Central Sales Tax Act, 1956, to be removed since in the circumstances of the case it found that imposition of such penalty was not proper.

(2.) BEING aggrieved by the said judgment and order of the Tribunal the State of Gujarat filed application under section 69 of the Gujarat Sales Tax Act being Reference Application No. 58/78 requiring the Tribunal to refer question of law to the High Court. By judgment and order dated 7th November, 1979, the Gujarat Sales Tax Tribunal refused the prayer for reference on the ground that the Tribunal had exercised its discretion and had come to the conclusion that there was reasonable cause on the part of the opponent for not paying the disputed amount in time.

(3.) RELEVANT facts for the purpose of answering the said question are stated hereunder : (i) The opponent had effected certain inter-State sales of optical goods in S. Y. 2024 to two parties of Bombay, namely, (i) M/s. Pravinchandra & Co. and (ii) M/s. R. Kantilal & Co. Since the transactions were inter-State sales they were accompanied by "c" forms obtained from respective parties. The Sales Tax Officer who was assessing the opponent wanted to verify the genuineness of said declaration forms and he referred the matter to the sales tax authorities at Bombay for conducting necessary enquiry. (ii) On the basis of report received from the sales tax authorities of Bombay, the Sales Tax Officer at Rajkot found that the "c" forms produced by the opponent were not issued to the concerned purchasers and one of the concerned purchasers has closed its business while in the case of another his registration certificate was cancelled, and therefore, the said "c" forms could not be accepted as genuine. He, therefore, disallowed the claim of the assessee to tax the said transactions at concessional rate and has subjected the disputed sales to tax at full rate of 10 per cent. (iii) Being aggrieved by the said order of the Sales Tax Officer the opponent approached the Assistant Commissioner of Sales Tax, Ahmedabad, in appeal who allowed the said appeal. (iv) The Deputy Commissioner of Sales Tax, Rajkot, thereupon, while scrutinising the order of the Assistant Commissioner of Sales Tax found that there was error in considering the declarations in form "c" as genuine and valid, and he therefore, exercised suo motu revisional jurisdiction and set aside the order passed by the Assistant Commissioner of Sales Tax and restored the order passed by the Sales Tax Officer and he also imposed penalty of Rs. 3,394 under section 36 (3) (a) of the Bombay Sales Tax Act, 1959, read with section 9 (2) of the Central Act, 1956. (v) Dissatisfied with the order in revision passed by the Deputy Commissioner of Sales Tax, Rajkot, the opponent preferred revision application to the Tribunal. Before the Tribunal it was, inter alia, contended that, in fact, M/s. Pravinchandra & Co. was holding Central registration number as well as local registration number. The sales tax authorities of Bombay in the report have found that said registration certificate of M/s. Pravinchandra & Co. has been cancelled with effect from 1st January, 1958. It was not stated as to which registration certificate was cancelled, namely, Central registration certificate or local registration certificate. Based on that lacuna it was submitted that the opponent cannot be said to have obtained the disputed "c" forms from bogus dealers. In fact, opponent obtained the "c" forms from genuine purchasing dealers. It was also urged before the Tribunal that the report of the Bombay sales tax authorities did not show that the "c" forms as obtained by these dealers were never issued by any of the competent authorities to those dealers at Bombay. It was found that in the case of M/s. Pravinchandra & Co. the registration was cancelled while in the case of M/s. R. Kantilal & Co. it has closed its business. It was not the case of the sales tax authorities at Bombay that the said "c" forms were not issued to the parties and therefore it was urged before the Tribunal that the opponent, in fact, relied upon the "c" forms supplied to him by the parties since he had no reason to doubt the parties holding registration numbers. Since the said "c" forms were bona fide received and used by the opponent, it was contended before the Tribunal that there was no justification for revising the order passed by the Assistant Commissioner of Sales Tax, Rajkot. (vi) The Tribunal in its judgment while reappreciating the evidence and the acceptability of the report received from the sales tax authorities at Bombay found that firstly the issuance of "c" forms by the sales tax authorities at Bombay was not in dispute; secondly it found that the "c" form books bearing Nos. Y/o 531976 to Y/o 532125 were issued to M/s. Dhirendra & Co. whose registration certificate was cancelled with effect from 1st April, 1968, due to closure of business; thirdly it found that M/s. Pravinchandra & Co. was not carrying on business and as such its registration certificate has been cancelled with effect from 1st January, 1968; fourthly, it found that the registration certificate of M/s. Kantilal & Co. was also cancelled. However, the Tribunal noted that issuance of "c" forms by the sales tax authorities at Bombay was not in dispute and in that sense it found that the "c" forms could not be said to be totally bogus. However, the Tribunal found substance in various objections raised by the advocate for the opponent-assessee in treating the "c" forms as invalid or unauthorisedly obtained and it notified that certain facts were required to be established before treating the said "c" forms as invalid or unauthorisedly obtained. The Tribunal, therefore, thought it proper to remand the matter to the Deputy Commissioner of Sales Tax to ascertain the facts, more particularly stated in para 13 of its judgment, and after verifying them to pass suitable order.