LAWS(ORI)-1991-11-35

MALI SAHU Vs. STATE OF ORISSA

Decided On November 06, 1991
MALI SAHU Appellant
V/S
STATE OF ORISSA Respondents

JUDGEMENT

(1.) THIS is a reference under sub-section (1) of section 24 of the Orissa Sales Tax Act, 1947 (hereinafter referred to as "the Act") made by the Sales Tax Tribunal wherein the question of law that arises on the order is whether the dealer is entitled to any adjustment of the tax paid by him while purchasing the goods. The Tribunal has framed the question as follows :

(2.) THE facts leading to the aforesaid reference are that the petitioner was a registered dealer having registration certificate CA-1-B/4 which he had surrendered on February 14, 1972, on the ground of closure of his business. Though the certificate had been surrendered by him, the same had not been cancelled by the registering authority. On November 19, 1976, the said dealer requested the appropriate authority to return the registration certificate with necessary amendment to include country liquor in the certificate and he also prayed for issue of "d" forms. The dealer started business in country liquor with effect from April 1, 1976, on which date the country liquor was not a taxable item. It became a taxable item with effect from May 1, 1976. The registering authority amended the registration certificate of the petitioner on April 8, 1977, and issued "d" forms on April 27, 1977. In the assessment proceeding, notwithstanding the service of notice on the petitioner under sub-section (4) of section 12 of the Act, the dealer did not produce the books of accounts. Therefore the assessing officer called upon the Inspector of Sales Tax, Rambha, to conduct an enquiry into the business activity of the dealer and on the basis of the report furnished by him as well as on the basis of past records of the dealer, a best judgment assessment was made and the gross turnover was fixed at Rs. 2,05,293 and the taxable turnover was fixed at Rs. 1,88,415. The tax at the rate of 6 per cent was levied and the dealer was called upon to pay the amount of Rs. 11,305. The petitioner carried an appeal against the said assessment order before the appellate authority and did take the stand that the petitioner is entitled to the adjustment in respect of the tax he has paid while purchasing the country liquor for the period from November 19, 1976, till April 27, 1977. The appellate authority allowed the petitioner's claim and held that the amount paid by the petitioner as tax during the period from November 19, 1976 to March 31, 1977, should be adjusted against the demand raised in the assessment on the sale turnover. He, therefore, set aside the assessment and directed the assessing authority to make a fresh assessment in accordance with the observations made in the appellate order. The department carried the matter to the Tribunal in second appeal. The Tribunal came to the conclusion that rule 36 of the Rules not having provided that tax paid by a registered dealer to the selling dealer at the time of purchase of goods can be adjusted against the sales tax payable by him, there is an implicit bar for such adjustment and, therefore, the appellate order was not in accordance with law. Accordingly the second appeal by the State was allowed. At the instance of the petitioner, the Tribunal, however, made a reference to this Court under section 24 (1) of the Act.

(3.) IN order to appreciate the contention of Mr. Ray, certain provisions of the Act as well as the Rules made thereunder require examination. Section 9 of the Act deals with registration of dealers and under section 9 (1) of the Act no dealer being liable under section 4 to pay tax under the Act can carry on business as a dealer unless he has been registered under the Act and possesses a registration certificate. Under sub-section (3) of section 9 of the Act, the prescribed authority has to register the applicant and grant a certificate of registration which shall specify the class or classes of goods in which the dealer carries on business. Admittedly the petitioner had a registration certificate as stated earlier and on February 14, 1972, he had surrendered the same but the appropriate authority had not cancelled that registration. Therefore, it remained alive. When the dealer started his business in liquor and liquor became a taxable item with effect from May 1, 1976, the petitioner made an application for amendment of his registration certificate by inclusion of country liquor in the same. This application was made on November 19, 1976, the registration certificate was amended on April 8, 1977 and "d" forms were issued on April 27, 1977. There was no problem subsequent to April 27, 1977. But the question arises as to whether the dealer having paid tax at the time of purchase of country liquor during the period from November 19, 1976 till April 9, 1977, can at all be entitled to claim adjustment in respect of the amount which he had paid as tax. In the eye of law, though the certificate was amended on April 8, 1977, it dates back to the date of application, i. e. , November 19, 1976. It was so held in the case of Bhanja Bhandar v. State of Orissa [1976] 37 STC 169 (Orissa ). Their Lordships observed that the assessee was to be treated as a registered dealer with effect from February 14/16, 1962, the date on which the application for registration was made and this decision was followed in the later decision in the case of Babaji Charan Sahu v. State of Orissa [1982] 51 STC 408 (Orissa ). Further under rule 7 (3), the registration certificate becomes effective from the date on which an application is made under sub-rule (1) of rule 6. On November 19, 1976, the assessee requested for return of his registration certificate for necessary amendment to include "country liquor" in the certificate. The registering authority, however, amended the registration certificate only on April 8, 1977. Applying the provision of rule 7 (3) it can very well be said that the assessee was a registered dealer with effect from November 19, 1976, when he made the request for return of the registration certificate to make necessary amendment for inclusion of "country liquor".