PREMIER AUTOMOBILES LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The facts which have given rise to this reference under section 61(1) of the Bombay Sales Tax Act, 1959, are somewhat unusual. The applicants are and were at all material times registered as a dealer under the said Act. During the quarter 1st April, 1964, to 30th June, 1964, the applicants sold chassis of motor vehicles to the Directorate-General, Supplies and Disposals, in the Ministry of Defence, Government of India. Under entry 37 of the notification issued by the State of Maharashtra under section 41 of the said Act, these sales were subject to a lower rate of tax, namely, 2 per cent, instead of 10 per cent, if the sales were for construction of bodies thereon and the purchaser gave to the selling dealer a certificate in form S. The chassis sold by the applicants to the Directorate-General of Supplies and Disposals were for construction of bodies thereon. Though no condition as to who is to construct the bodies of chassis was prescribed in the said entry 37 as it stood at the relevant time, form S in which the certificate was to be given by the Directorate-General requires a declaration by the purchaser, namely, the Ministry of Defence, Government of India, that the chassis purchased were delivered to a firm of body builders for construction of bodies thereon. The applicants filed their return for the said quarter on 7th August, 1964, which was the last date for filing returns for the quarter April-June, 1964. Prior thereto they paid into the Government treasury the amount of tax payable according to such return. In view of the certificates in form S given by the Ministry of Defence, the applicants showed the sales of chassis of motor vehicles made to the Directorate-General of Supplies and Disposals as being chargeable to tax at 2 per cent, and it was on that basis that the amount of tax payable was worked out in the said return and paid into the Government treasury. It is an admitted fact that the Ministry of Defence, instead of giving the chassis to a firm of body builders, constructed the bodies themselves. Thereupon feeling some doubt as to the rate of tax applicable to these transactions, the applicants filed an application under section 52 of the said Act to the Commissioner of Sales Tax to determine the rate of tax payable on the said transactions. On 15th March, 1965, the Commissioner held that the rate of tax payable was 10 per cent and not the concessional rate of 2 per cent. This decision was communicated to the applicants on 30th March, 1965. The applicants then went in appeal to the Sales Tax Tribunal against the said determination by the Commissioner. During the pendency of the said appeal, between 27th November, 1965, and 11th December, 1965, the applicants paid into the Government treasury a sum of Rs. 14,57,382.10, being the amount of tax at 10 per cent on these transactions in excess of the amount of tax on them previously paid by them at 2 per cent. The applicants' appeal to the Tribunal was dismissed on 15th July, 1966.

(2.) Before we continue with the recital of the facts it may be convenient to mention that realising the confusion as also the hardship which was being created by reason of the apparent conflict between the wording of the said entry 37 and of the said form S, in December, 1964, the said entry was amended and two new forms, namely, forms S-1 and S-2, were inserted in the said notification under section 41, under which there could not have been any doubt whatever that the transactions of sale by the applicants to the Ministry of Defence would be chargeable to tax at the concessional rate of 2 per cent.

(3.) By his order of assessment dated 31st December, 1967, the Sales Tax Officer imposed upon the applicants a penalty under section 36(3) of the said Act in the sum of Rs. 3,14,834.67 on the ground that the applicants had made late payment of the said sum of Rs. 14,57,382.10 instead of paying it prior to filing their return for the April-June, 1964, quarter. The applicants thereupon went in appeal to the Assistant Commissioner of Sales Tax. The Assistant Commissioner upheld the applicants' contention with respect to this imposition of penalty and deleted it on the ground that they had paid the amount of tax according to their return for the said period and that the subsequent amount which was paid by them was paid by them by returning the said certificates in form S to the Ministry of Defence, Government of India, and on collecting from them the amount of the balance of the tax which they would have to pay on these transactions.