STATE OF HARYANA Vs. JIWAN GENERAL MILLS

JUDGEMENT

(1.) M /s. Jiwan General Mills, Kaithal, a registered dealer, filed four quarterly returns for the year 1972-73 showing the gross turnover of Rs. 52,72,790. 02. In response to notice issued for assessment, a partner of the firm produced account books. It was found that the entries correctly reflected the sales and no discrepancy was found in the account books. All sales were vouched. The learned Assessing Authority observed that "i have no reason to discard the account books of the dealer and as such the gross turnover as returned by the dealer was taken for the purposes of assessment".

(2.) THE dealer claimed deductions to the tune of Rs. 49,36,670. 38 under section 5 (2) (a) (ii) of the Punjab General Sales Tax Act, 1948 on account of sales having been made to registered dealer. This claim was accepted except in relation to four transactions of sales of cotton seeds worth Rs. 1,03,042. 50 to M/s. Malikpuria Oil Mill, Kaithal, Rs. 8,01,676. 46 to M/s. Puran Chand Sarwan Kumar, Kaithal, Rs. 87,436. 88 to M/s. Bal Raj Rameshar Dass, Kaithal, and Rs. 9,479. 10 to M/s. New Jagadhari Oil Mill. Regarding this, it was observed that the purchasers are registered dealers but they are manufacturers of oil. The cotton seeds sold to these dealers were of inferior quality which are mostly used for crushing purposes. Thus, the claim of the respondents of Rs. 3,76,608. 31 was disallowed and these were included in the taxable turnover of the dealer on the plea that it was last seller of cotton seeds which were used for crushing purposes and the factory owner was liable to tax. Aggrieved, the dealer filed the appeals. The Deputy Excise and Taxation Commissioner (Appeals) came to a conclusion that proper opportunity has not been afforded to the appellant to establish that the cotton seeds were sold to above-mentioned dealers for resale and the Assessing Authority failed to confront the purchasing dealers with the material available for determining whether cotton seeds purchased by them were for sale or for use in manufacture of edible oils. It was further observed that as a matter of fact the Assessing Authority should have confronted the purchasing dealers to verify the correct position but it has not been done so. In case the purchasing dealers purchase cotton seeds for use and manufacture and not for resale, the appellant-firm will be liable to pay tax being the last seller. In this view of the matter, he set aside the abovesaid order and remanded the case to the Assessing Authority to make further enquiry from the purchasing dealers about the purchase of cotton seeds, whether it was for resale or for use in the manufacture and that the appellant should also be confronted after making enquiry from the purchasing dealers before levying tax. Still dissatisfied, the dealer took an appeal before the Sales Tax Commissioner, Haryana. This appeal was allowed. It was contended by the dealer before the learned Tribunal that the dealer while selling cotton seeds was enjoined by law only to satisfy himself that the sales were being made to registered dealer and that the purchasing dealer had furnished valid and genuine declaration in form S. T. XXII incorporating thereunder that the goods purchased were for resale. It was not for the selling dealer to question the correctness of the statement made in the declaration. If the purchasing dealer makes a wrong statement in his declaration under form S. T. XXII while purchasing goods which are exigible to sales tax then the authorities can proceed against such a dealer. There were ample provisions for that in the Act. In support of this contention, the decision of this Court in Bhim Cotton Company v. Assessing Authority, Sangrur 1973 RLR 208 was cited, wherein it was held as under :

(3.) THIS argument found favour with the learned Tribunal. It held that on the sales of cotton seeds made against valid registration certificates and where form S. T. XXII supplied by the purchasing dealer does not indicate that the goods are required for the purpose other than resale, the selling dealer was not liable to pay tax. It was, however, observed that the departmental authorities may take such action as they deem fit against the purchasing dealers for the recovery of the tax.