COMMERCIAL TAXES OFFICER Vs. HINDUSTAN RADIATORS

JUDGEMENT

(1.) THIS is an application u/s 15 (2) (b) of the Rajasthan ST Act, 1954 (No. XXIX of 1954) (for short the Act), for directing the Board of Revenue for Rajasthan at Ajmer (hereinafter referred to as 'the Board) to State the case and refer the following question of law, arising out of the order dated June 18, 1982, passed in Special Appeal No. 1/80/st/ju/ which the Board refused to refer by its order dated November 5, 1982 on the application u/s 15 (1) of the Act; "whether under the facts and circumstances of the case learned single Bench and double Bench were right in setting aside the penalty imposed u/s 5c (2) only for the reason that Assessing Authority did not cancel the entry on R. C. whereas dealer has contravened the provisions of sec. 5c (1) and misused the declaration?"

(2.) NON-petitioner no. 1 (dealer-assessee) is a partnership firm carrying on the business of manufacturer of Motor Radiators etc. and is a registered dealer under the Act. The period involved is January 1, 1970 to December 31, 1970. The dealer assessee purchased Hydrochloric Acid (Tejab) worth Rs. 3. 283. 43 by giving a declaration that this Acid is raw material for manufacturing of Radiators by it and, therefore, he is entitled to pay to the seller concessional rate of tax at the rate of 1% as provided by sec. 5c (1) of the Act. The CTO, Special Circle, Jodhpur, by his assessment order dated December 6, 1972 for the period January 1, 1970 to December 31, 1970 was of the opinion that Hydrochloric Acid is not a raw material for the manufacture of Radiators within the meaning of raw- material as defined in sec. 2 (mm) of the Act and, therefore, the dealer was not entitled to the concessional rate of tax at the rate of 1%. The Assessing Authority therefore, imposed penalty on Rs. 350/- u/'s 5cc2) of the Act. The dealer Assessee filed an appeal against the order dated December 6, 1972 imposing penalty of Rs, 350/- The Dy. Commr. (A), Commercial Taxes, Jodhpur, by his order dated July 17, 1975, disagreed with the Assessing Authority, accepted the appeal and deleted the penalty of Rs. 350/- The CTO, Special Circle Jodhpur, filed a revision before the Board. A single Bench of the Board dismissed the revision of Feb 6, 1980. A special appeal was lodged by the Assessing Authority. The Division Bench of the Board dismissed the special appeal by its order dated June 18, 1982. The reason given by the Division Bench was that since in the case of this very assessee in Revision No. 418/75/st/ju/ for an earlier year, the Board by its order dated June 15, 1979, held that Hydrochloric acid is a raw material for the manufacture of the radiator and as such the point that is agitated that Hydrochloric acid is a raw material for the manufacture of radiator, cannot be investigated as the finding recorded in the earlier years on this very question operates as res judicata against the Assessing Authority. The other finding, which is material for the disposal of this application, is as follows: "we are of the view that the entries in the registration certificate of a manufacturer about-certain articles being raw materials for his manufacturing activities are conclusive and any modification thereof can only be made by the competent authority after following the prescribed procedure and it is not open to taking authorities to conclude that certain articles, though mentioned as raw materials for the manufacturing activities of the assessee in the registration certificate, are not raw material. Apart from this general position, the present assessee had been dragged to various courts on the same ground earlier and the findings have been conclusively against the department". The Assessing Authority submitted an application u/s 15 (1) of the Act, which was rejected by order dated November 5, 1982 on the ground that no referable question of law arises out of the order of the Board passed in special appeal. That led the Assessing Authority to file this application.

(3.) THE sheet-anchor of the argument of the learned counsel for the CTO is that the Hydrochloric Acid is not raw material for the manufacture of radiators and, therefore, even the utilisation of Hydrochloric Acid for the manufacture of radiators entails the imposition of penalty u/s 5c (2) of the Act. THE application for registration certificate is required to be made in Form ST 3 and the certificate of registration is granted to the assessee in Form ST 4 on the basis of that application. It will be useful to extract the relevant portion of that form:- "the following raw materials are required by the dealer manufacture for use by himself in the manufacture of goods for sale. . . From. . . (date) the dealer is dealing in/or intends to deal in the following goods exempted under sub-s. (2) of section of the Act. This certificate shall remain in force upto (To be mentioned in case of registration u/s 68)". THE raw material, Hydrochloric Acid was mentioned in Form ST 3 and, therefore, in Form ST 4, this was stated to be raw-material. THE contention of Mr. K. C. Bhandari in this regard is that the dealer assessee made a statement in Form ST 3, which is an application for registration certificate regarding Hydrochloric Acid as raw material and so, in Form ST 4, it was also stated without any enquiry as to whether the raw material mentioned by him in the application is in fact raw material or not; as there is no provision for making enquiry and so, the Board went wrong when it came to the conclusion that the entry in the certificate of registration is conclusive against the Department. THE effect of granting recognition certificate was considered by a Division Bench of the Bombay High Court in Bowen Press's case while considering ss. 12 and 15 of the Bombay Sales Tax Act, (No. 11 of 1959 ). THE Division Bench of the Bombay High Court consisting of D. P. Madon, J (as he then was) and M. H. Kania, J observed that when a recognition certificate is granted by the officer and any particular goods are included in the list appended to the recognition certificate, the grant of this certificate implies a finding by the officer that the goods listed are goods in respect of which recognition has been granted. We agree with the view taken in Bowen Press's case that the entry in the registration certificate of the dealer assessee that certain articles are raw material for the manufacture of goods is conclusive and in face of the entry in the registration certificate, it is not open to the assessing authority to contend that though a particular article has been mentioned in the registration certificate as raw material, is not in fact a raw material within the meaning of s. 2 (mm) of the Act and, if any, cancellation or modification is sought in respect of that entry, then, it is only by following the procedure laid down under the Act and the Rules framed thereunder that entry can be cancelled or modified. It follows, therefore, that entry in the registra-tion certificate shows that Hydrochloric Acid was purchased as raw material for manufacture of the radiators by the dealer assessee and until and unless it is cancelled or modified it is binding on the Department and is conclusive proof of the fact that Hydrochloric acid is raw material for manufacture of the radiators by the dealer assessee.