TRACWAYS PRIVATE LTD Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THIS petition under Article 226 of the Constitution is by a company, M/s. Tracways Private Ltd. , which was incorporated on 31st December, 1977, under the Indian Companies Act, 1956. The petitioner made an application for registration as a dealer under Section 16 of the Madhya Pradesh General Sales Tax Act, 1958. The application was rejected by the Sales Tax Officer, Bhopal, by his order dated 10th April, 1978. In the revision filed by the petitioner, the order of the Sales Tax Officer was set aside and the application was remanded for deciding it afresh after notice to the petitioner. The application was again dismissed by the Sales Tax Officer by his order dated 1st July, 1978. The revision filed by the petitioner was dismissed by the Commissioner of Sales Tax on 4th October, 1978. The petitioner by this petition challenges these orders.

(2.) THE application made by the petitioner for registration as a dealer was rejected by the Sales Tax Officer on two grounds. The first ground was that the petitioner-company has been formed by a partnership concern M/s. Dawar Brothers with an intention of avoiding payment of sales tax dues outstanding against the partnership and for availing of the benefit which accrues as a result of registration. The second ground was that the turnover of the petitioner-company was not likely to exceed the limit specified in Sub-section (5) of Section 4 of the Act, i. e. , Rs. 50,000. The Commissioner, however, in revision has not pronounced upon the correctness of the second ground and has dismissed the revision only on the ground that the petitioner-company was formed as a device by Dawar Brothers to avoid the payment of Government dues and to dodge the Government.

(3.) THE partnership which carried on the business in the name of M/s. Dawar Brothers consisted of three partners, namely, Suraj Kishan Dawar, Awatar Kishan Dawar and Kishan Dawar. The partnership was a registered dealer. Sales tax dues amounting to one crore rupees are yet to be recovered from this partnership. The registration of the partnership was cancelled under Section 15 (10) of the Act on the ground that it is in arrears of tax. The petitioner-company consists of four shareholders, two of whom, namely, Smt. Roma Dawar and Smt. Aruna Dawar, are respectively wives of Suraj Kishan Dawar and Kishan Dawar, partners of M/s. Dawar Brothers. The facts found by the Commissioner, which were in fact not disputed before him, are contained in sub-paragraphs (1) to (5) of paragraph 8 of his order, which reads as follows :