PRAG VANASPATI DEPOT Vs. STATE OF HARYANA

JUDGEMENT

(1.) THIS is a reference initiated by the applicant, Messrs. Prag Vanaspati Depot, Gurgaon, which firm filed an application under Section 22 of the Punjab General Sales Tax Act, 1948 (hereinafter referred to as the Act), praying to the Sales Tax Tribunal to refer the following question of law for the opinion of this Court :

(2.) THE facts giving rise to the reference may be briefly noticed. The applicant is a registered dealer under the Punjab General Sales Tax Act, 1948 and the Central Sales Tax Act, 1956. The firm is carrying on the business of vanaspati ghee manufactured by it at Aligarh (U. P. ). The present reference relates to the assessment year 1966-67. While the assessment case of the applicant was under consideration, the firm, claimed deductions with regard to sales made to two firms, namely, Messrs. Sohan Lal Raghunandan Lal of Ludhiana and Messrs. Laxmi Trading Company, Amritsar. Both these firms were also registered dealers. In so far as the Ludhiana firm is concerned, the applicant has already got relief in appeal, but the dispute subsists with respect to the sales made to the Amritsar company which are to the tune of Rs. 5,21,075. 50, for which deduction was claimed under Section 5 (2) (A) (ii) of the Act. The Assessing Authority vide order dated 25th March, 1968, allowed the aforesaid deduction. Subsequently, however, the Deputy Excise and Taxation Commissioner, exercising the powers of the Commissioner under Section 21 of the Act, issued notice to the applicant with a view to reopen the assessment on the basis of a report of the audit that the firms at Ludhiana and Amritsar were not genuine dealers and their registration certificates had been cancelled by the competent authority. The case of the applicant was that though the registration certificate of the Amritsar firm had been cancelled on 8th November, 1965, the said firm had obtained a stay order from this Court and had been working under their registration certificate by virtue of this stay order. There is no dispute that the stay order referred to above, was granted by this Court on 25th January, 1966, vide annexure E. Apart from the above contention, the applicant claimed the deduction on two other grounds, namely, that the cancellation of the registration certificate had at no time been notified in the official Gazette, as required under Rule 12 (2) of the Punjab General Sales Tax Rules, 1949, nor had the Amritsar firm surrendered the registration certificate to the Assessing Authority, as required under Rule 14 of the said Rules. The Deputy Excise and Taxation Commissioner, however, repelled the above objections and declined to allow the deduction primarily on the ground that the writ petition in which the Amritsar firm had obtained the stay order was ultimately dismissed. A review application before the Deputy Excise and Taxation Commissioner, however, succeeded only in regard to the sales made to the Ludhiana firm and not to the Amritsar firm. The applicant's appeal before the Sales Tax Tribunal also failed. The present reference has, thus, been initiated for the consideration of the question reproduced above.

(3.) WE have Heard Mr. R. P. Sawhney, the learned counsel for the petitioner and Mr. P. S. Kadian for the Advocate-General, Haryana, at considerable length. In so far as the question referred to this Court is concerned, it can be split up in two parts. The first part relates to the claim for deduction on the basis of the stay order granted by this Court in favour of the Amritsar firm. The learned counsel for the parties have not been able to cite any authority on the subject and the matter has, therefore, to be considered on first principle. There is no gainsaying that the very notion of issuing a stay order is to place the parties in the same position as they were prior to the passing of the impugned order. This being so, there is no manner of doubt that during the period when the stay order is effective, the registration certificate in favour of the Amritsar firm which obtained the stay order, must be deemed to be valid. It was on the basis of this registration certificate that the applicant-firm supplied the goods to the Amritsar firm and did not charge sales tax as permissible under the law. It cannot be expected that a selling firm would continue to charge sales tax from the purchasing firm for an indefinite period, even though the validity of the registration certificate of the latter firm was intact in view of the stay order. The mere fact that the writ petition of the Amritsar firm was ultimately dismissed, would not incur liability upon the petitioner for recovery of sales tax on sales made to the Amritsar firm during the pendency of the stay order. It is not a case where the dispute is only between the Amritsar firm and the sales tax authorities, but the interest of a third party, namely, the petitionerfirm has also come into being. We have, thus, no hesitation in holding that on account of the issuance of the stay order by this Court in favour of the Amritsar firm, the sales made by the petitioner-firm to the Amritsar-firm on the basis of the registration certificate of the latter, are not chargeable to sales tax. This part of the question is, therefore, answered in favour of the petitioner-firm and against the respondent.