COMMISSIONER OF SALES TAX Vs. ROSHANLAL GULSHANLAL

JUDGEMENT

(1.) THE Board of Revenue acting under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958 has referred the following question for decision of this Court :

(2.) M /s. Roshanlal Gulshanlal of Bhatapara was being assessed to sales tax for sale of new bardanas for a period between 30th October, 1970 and 19th December, 1971. In the course of assessment proceedings, it revealed that the dealer has shown a purchase of old bardana worth Rs. 60,000 from one Jagdish Prasad Mool Shanker. This Jagdish Prasad Mool Shanker was shown as a registered dealer under the Madhya Pradesh General Sales Tax Act and, therefore, the dealer claimed exemption from the sale of these bardanas under Section 2(r)(ii) of the Act. The assessing authority, however, found that the registration certificate of the selling dealer, viz., M/s. Jagdish Prasad Mool Shanker was revoked from its inception. It was held that the said purchase of old bardana from Jagdish Prasad Mool Shanker was from unregistered dealer. Therefore, the dealer was held not entitled to claim deduction of the amount realised by sale of those bardanas from his taxable turnover. Consequently, sales tax was imposed on the amount realised by sale of this item by the dealer. The appeal before the Appellate Assistant Commissioner of Sales Tax, Raipur proved abortive. The dealer preferred a second appeal before the Tribunal (Board of Revenue). By order dated 21st June, 1975, the Board of Revenue allowed that appeal. It was found that the claim of the tax -paid purchases from the local registered dealer was verified and found to be correct. Consequently, it was held : 'the fact that the registration certificate was subsequently cancelled, though with retrospective effect is not a good and sufficient basis for rejecting the claim for exemption under Section 2(r)(ii)'. The Revenue was not satisfied with the order of the Board of Revenue and, therefore, applied to it for referring the question aforesaid to the High Court. Influenced by the decision of this Court in Narayan Das Mangal Sen v. State of M. P. (decided on 21st March, 1979) (1980) 13 VKN 18 the Tribunal felt that the question did arise out of Tribunal's order for decision by this court and has therefore made this reference.

(3.) AS we have earlier mentioned in order to claim that benefit of the exemption under Section 2(r)(ii) of the Act all that the dealer is required to show is that he made the purchases from a registered dealer, i.e., at the time the purchases were made the selling dealer was a registered dealer. In point of fact the dealer has been able to establish that. The subsequent cancellation of the registration, even from its inception will not have the effect of depriving him of that benefit under Section 2(r)(ii) of the Act for the requirement of law stood satisfied as soon as he could show that the purchase was from a registered dealer. To us, what appears to be significant and relevant is the fact of the selling dealer to be a registered dealer at the time when the purchase was made from him by the concerned dealer. The subsequent cancellation of the registration to us, does not seem to be creating any impediment in claiming benefit under the provisions of Section 2(r)(ii) of the Act.