CHUDGAR RANCHHODLAL JETHALAL Vs. STATE OF GUJARAT

JUDGEMENT

(1.) BEFORE coming to the questions referred to this Court, we would like to say the facts of the case somewhat in detail.

(2.) THE applicant-dealer was carrying on the business of selling cotton on wholesale basis and was registered as a dealer both under the Bombay Sales Tax Act, 1959, and under the Gujarat Sales Tax Act, 1969. The dealer was holding a licence under the abovesaid Acts and was assessed under the Acts by the Sales Tax Officer, Ahmedabad for Samvat Year 2026 on March 18, 1971, November 30, 1971 and May 31, 1974 respectively. It appears that a surprise visit was paid to the applicant's place of business on April 24, 1974 and certain account books, etc. for Samvat Year 2024 to Samvat Year 2028 were impounded. Relying upon the impounded materials the sales tax officials had come to the conclusion that the sales made by the dealer to M/s. Vijay Traders against certificate in form 16 were wrongly allowed as deduction in the assessment on the ground that M/s. Vijay Traders did not hold any licence under the Bombay Act, but it posed as a licensed dealer and had consequently issued fake certificates in form 16 to the dealer. It was also noticed that the abovesaid certificates were given under the signature of different persons. Such transactions of sale were of Rs. 14,85,738 in Samvat Year 2024, and of Rs. 3,12,581 in Samvat Year 2025, and of Rs. 5,70,322 for the period from Kartik Sud 1 to Chaitra Vad 30 of Samvat Year 2026. The Sales Tax Officer had reassessed the assessee under section 35 of the Bombay Act under his orders dated January 21, 1976, and in this reassessment the transactions of sales made to M/s. Vijay Traders were subjected to tax. However, the Sales Tax Officer had excluded those transactions from taxation where the goods were repurchased by the dealer from M/s. Vijay Traders and were resold by the applicant dealer eventually. So far as Samvat Year 2028 is concerned the Sales Tax Officer while assessing the dealer for the first time on January 21, 1976 under section 41 of the Gujarat Act, had disallowed the sales made by the dealer to M/s. Vijay Traders, M/s. Sadhana Traders, M/s. Nishitkumar M. Sheth and M/s. Sanjivani Textile Traders who did not hold licences at all under the Gujarat Act. Certain defects were noticed in respect of certificates issued by M/s. Sadhana Traders and M/s. Nishitkumar M. Sheth to the applicant-dealer. Against the abovesaid orders of reassessment and assessment as the case may be, the dealer had preferred first appeals before the Assistant Commissioner of Sales Tax without any gain. The applicant-dealer assessee thereafter had carried the matter before the Tribunal in second appeals being Second Appeals Nos. 51, 52 and 53 of 1979 filed under the Bombay Act and Second Appeal No. 56 of 1979 filed under the Gujarat Act.

(3.) THE main contention of the dealer before the Tribunal was that that section 9 (4) of the Gujarat Act read with section 15 of the Central Sales Tax Act, 1956, does not contemplate subsequent stage of the sale of declared goods but subsequent levy in point of time, and that if the general sales tax is already levied it becomes final in the hands of another licensed dealer, the same cannot be assessed on the dealer. The abovesaid contention was sought to be made good on the interpretation of sub-section (4) of section 9 of the Gujarat Act read with section 15 of the Central Act. The abovesaid contentions raised on behalf of the dealer were sought to be repelled by the Revenue by urging that the socalled double taxation in the dealer's case is not due to any flaw in section 9 of the Gujarat Act which is in conformity with section 15 of the Central Act but because the dealer itself had chosen to sell the items of declared goods to the non-licensed dealers thereby making itself the last stage at which the tax was legally liable and has been rightly levied in the instant case. It was also contended on behalf of the Revenue that the chain or channel of trade through which the declared goods would normally pass was not adhered to by the dealer and therefore the dealer was required to be blamed for being in predicament for its sale being at the last stage for the levy of the General Sales Tax Act. The Tribunal had considered the rival contentions advanced in support of the assessee and the Revenue and ultimately had come to the conclusion that it is true that regard being had to section 15 of the Central Act and section 9 of the Gujarat Act the subsequent sale cannot be taxed. But in the instant case the stage set for the levy of general sales tax is when a licensed dealer sells the goods to a dealer who was not holding a licence, and therefore in the instant case the dealer was liable to be taxed as the last dealer. Taking the abovesaid view the Tribunal had preferred to dispose of all the second appeals by the orders dated September 10, 1981. Later on the dealer-assessed had made the necessary application for making a reference of certain questions to this High Court which came to be granted by the Sales Tax Tribunal and ultimately the following questions have been referred to this High Court under section 61 (1) of the Bombay Act :