SURESH TRADING COMPANY Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The applicants were at all relevant times registered as a dealer under the Bombay Sales Tax Act, 1959 (hereinafter for the sake of brevity referred to as "the said Act"). During the period 1st January, 1967, to 31st December, 1967, the applicants purchased dyes and chemicals of the aggregate value of Rs. 92,050.30 from Messrs. Sulekha Enterprises Corporation (hereinafter for the sake of brevity referred to as "Sulekha Enterprises"). It appears that these purchases were made on four different dates, and in respect of them Sulekha Enterprises issued to the applicants their bills dated (1) 9th February, 1967, in the sum of Rs. 28,225, (2) 17th February, 1967, in the sum of Rs. 29,205, (3) 15th May, 1967, in the sum of Rs. 12,870 and (4) 17th May, 1967, in the sum of Rs. 21,750.30. Sulekha Enterprises were also registered as a dealer under the said Act, and each of these bills contained a certificate that the registration certificate of Sulekha Enterprises was in force on the date of the sale of the goods to the applicants. Such certificates were signed by the proprietor of Sulekha Enterprises. Thereafter the applicants resold in the State of Maharashtra the said goods purchased by them from Sulekha Enterprises.

(2.) In their assessment for the said period 1st January, 1967, to 31st December, 1967, the applicants claimed to deduct from their turnover of sales the turnover of resales of the said goods purchased by them from Sulekha Enterprises. This deduction was claimed by the applicants under section 10(1)(ii) of the said Act under which the turnover of resales of goods purchased by a dealer from a registered dealer (that is, a dealer registered under section 22 of the said Act) is to be excluded from his turnover of sale of goods specified in Schedule E to the said Act for the purpose of arriving at his taxable turnover, provided a certificate as provided in section 12A has been furnished. The certificate mentioned in section 12A is to be contained in the bill issued by the selling dealer and is to be in the form in which the certificates appear on the above-mentioned bills of Sulekha Enterprises. The Sales Tax Officer, however, disallowed the applicants' claim for deduction, and included the turnover of the said resales in the applicants' taxable turnover of sales on the ground that the registration certificate of Sulekha Enterprises was cancelled on 25th August, 1967, with effect from 1st January, 1967, and, therefore, at the dates when the applicants purchased the goods in question Sulekha Enterprises could not be said to be a registered dealer. In view of the disallowance of this claim for deduction, the amount of tax paid by the applicants prior to filing their quarterly return became less than eighty per cent of the amount of tax finally assessed on them, and accordingly the Sales Tax Officer levied a penalty in the sum of Rs. 1,700 upon the applicants under clause (c) of sub-section (2) of section 36 of the said Act, which provided that a dealer who has concealed the particulars of any transaction, or knowingly furnished inaccurate particulars of any transaction liable to tax, will be liable to pay a penalty in a sum not exceeding one and one-half times the amount of the tax. Explanation (1) to the said clause (c) further provides that where the amount of tax paid by the dealer for any year is found to be less than eighty per cent of the amount of tax assessed, he shall be deemed, for the purpose of the said clause (c), to have concealed the turnover, or knowingly furnished inaccurate turnover liable to tax, unless he proves to the satisfaction of the Commissioner of Sales Tax that the payment of a lesser amount of tax was not due to gross or wilful neglect on his part.

(3.) The applicants went in appeal to the Assistant Commissioner of Sales Tax against the said order of assessment. Their appeal was dismissed, and so far as the levy of penalty was concerned the Assistant Commissioner held that as the amount of tax paid by the applicants was less than eighty per cent of the amount of tax assessed, the levy of penalty was proper and justified. The applicants thereafter went in second appeal to the Maharashtra Sales Tax Tribunal. The Tribunal upheld the disallowance of the claim for deduction, but deleted the imposition of penalty.