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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JODHPUR.
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:: O R D E R ::
Commercial Taxes Officer
Circle 'D', Jodhpur Vs. M/s Bhawani Exports
(1) S.B. SALES TAX REVISION PETITION NO.580/1999
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Commercial Taxes Officer
Circle 'D', Jodhpur Vs. M/s Bhawani Emporium
(2) S.B. SALES TAX REVISION PETITION NO.581/1999
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Date of Order :::: 13th October 2008.
PRESENT
HON'BLE MR. JUSTICE DINESH MAHESHWARI
Mr.Rishabh Sancheti for
Mr.Vineet Kumar Mathur, for the petitioner.
Mr. Neeraj Jain for
Mr.Anjay Kothari, for the non-petitioner.
...
BY THE COURT:
These two revision petitions have been preferred by the
revenue against the common order dated 27.08.1998 as
passed by the Rajasthan Tax Board, Ajmer whereby the Tax
Board has dismissed its similar appeals preferred against the
common order dated 24.02.1995 as passed by the Deputy
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Commissioner (Appeals), Jodhpur in the respective appeals
preferred by the dealers. Having been preferred against the
common order and involving a similar question, these revision
petitions have been heard together; and are taken for disposal
by this common order.
The aspects relevant for determination of the question
involved in the matter are that while making assessments for
the financial year 1990-91 in respect of the non-petitioners
dealers, the Assessing Authority observed that certain
handicrafts items were purchased by the dealers for re-sale
under Form ST-17 but were sold for the purpose of exports
under Form ST-17B and, on the opinion that the purchase on
Form ST-17 was not for exports, the Assessing Authority
issued notice to the dealers as to why purchase tax be not
imposed; and, for want of a plausible reply, the Assessing
Authority proceeded to impose 10% purchase tax and interest
thereupon in the separate assessment orders dated
01.06.1994. The amount involved in that regard in relation to
the non-petitioner M/s Bhawani Exports (CR No. 580/1999)
had been 10% tax on Rs. 1,80,000/- i.e., Rs. 18,000/- and
interest at Rs. 13,320/-; and that in relation to the non-
petitioner M/s Bhawani Emporium (CR No. 581/1999) had
been 10% tax on Rs. 1,17,792/-, i.e., Rs. 11,779/- and interest
at Rs. 8,716/-. In the said assessment orders there had been
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certain other additions and impositions too but the same are
not the subject matter of these petitions.
Aggrieved by the aforesaid assessment orders dated
01.06.1994, the dealers preferred respective appeals and the
learned Deputy Commissioner (Appeals), Jodhpur proceeded
to partly allow the same. So far the subject matter of these
two revision petitions is concerned, the learned Appellate
Authority observed that under the provisions of Sections 5 and
5-A of the Rajasthan Sales Tax Act, 1954 [‘the Act of 1954’], in
the given circumstances, purchase tax could not be levied;
that the goods were purchased from the registered dealers as
per the notification dated 01.12.1986 and were sold within the
State to the exporters; the purchasers of the dealers were the
exporters who were entitled to purchase the goods from the
registered dealers in the State without paying the tax. In such
a legal position, the purchase tax, according to the Appellate
Authority, could not have been levied on the dealers. It was
also observed that as per the first proviso to Section 5-A of the
Act of 1954, if the goods were used for the declared purposes,
purchase tax could not be levied. The Appellate Authority,
therefore, proceeded to set aside the levy of purchase tax and
the related component of interest while partly allowing the
appeals by the common order dated 24.02.1995.
In the appeals taken to the Tax Board by the revenue
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against the common order aforesaid, on behalf of the dealers
was referred a decision of this Court in CWP No. 1650/1993 in
the context of the notification No. F.4(8) FD/Gr.IV/94-51 as
issued by the Finance Department on 07.03.1994. The
learned member of the Tax Board proceeded to observe that
under Form ST-17 B the goods were sold for export; and
before export, it had been inter-State sale but there was no tax
liability in the dealers in view of the said notification dated
07.03.1994 (that has been mentioned as notification dated
07.03.1990 in the impugned order but its correct date,
admittedly, is 07.03.1994).
Aggrieved, the Department has preferred these two
revision petitions and it is submitted that the result as given out
by the two Appellate Authorities had been that tax had not
been paid at any point and that would be in violation of the Act
of 1954 and against the legislative philosophy behind the laws
of sales and purchase tax. With reference to the notifications
dated 01.12.1986 and 07.03.1994, it is submitted that the
learned Appellate Authorities have not properly looked at the
meaning and purport of the same; and reliance on the order
passed by a Division Bench of this Court in CWP No.
1650/1993 has also been misplaced.
Learned counsel for the petitioner has referred to the
fact that the goods were procured by the non-petitioners
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without payment of tax under Form ST-17 and that carried
specific declaration that the goods would be taxable at the last
point. According to the learned counsel, the declaration was
definitely violated when the goods are attempted to be sold
under Form ST-17B. It is submitted that avoidance of tax by
the dealers in this manner cannot be countenanced.
The relevant parts of Section 5-A of the Act of 1954
dealing with levy of purchase tax, as operative at the relevant
point of time, read as under:-
5A. Levy of Purchase Tax.- (1) Every dealer who in the
course of his business purchases any goods other than
exempted goods, in circumstances in which no tax under
section 5 and 5E is payable on the sale price of such
goods, shall be liable to pay tax on the purchase price of
such goods at the same rate at which it would have been
leviable on the sale price of such goods under section 5
and 5E:
Provided that no tax under this section shall be
levied on a dealer other than a casual trader or any other
dealer in goods (except cereals and pulses) notified for the
purpose of clause (ccc) of section 2 in respect of any year
in which the aggregate of purchase price of all the goods
purchased by him does not exceed ten thousand rupees:
Provided further that the provisions contained in the
first proviso to section 5 shall apply to the tax leviable
under this section as if for the word ‘sale’ wherever
occurring therein, the word ‘purchase’ were substituted.
(2) If any dealer has purchased any goods without paying
any tax or after paying tax at concessional or reduced rate
of tax on the strength of any declaration furnished by him
under the Act, the purchase price of such goods shall be
included in his taxable turnover, and such dealer shall be
liable to pay tax at the same rate at which it would have
been leviable on the sale price of such goods under
section 5 and 5E:
Provided that if the dealer satisfies the assessing
authority that the said goods have been utilised for the
purpose mentioned in the declaration form, the purchase
price of such goods shall not be included in his taxable
turnover:
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Provided further that the dealer shall be entitled to
claim set-off of the tax paid by him on the purchase price
of such goods, against the tax payable on his taxable
turnover.
(3)…………”
The notification dated 01.12.1986, as reproduced in the
revision petitions reads as under:-
” F.5(118) FDGr.IV/71 dated 1.12.1986
S.O.131.- In pursuance of rule 15 of the RST
Rules, 1955, and in supersession of FD notfn No.F.5(40)
FDRT/63-1 dated 23.3.1963 [S.No.53], as amended from
time to time, the State Govt. hereby directs that with
immediate effect the tax payable under S.5 of the Act on
the sale of goods manufactured in Rajasthan by any
manufacturer holding a certificate of registration under the
Act shall be at the following points, namely:-
(a) When sale is made by such manufacturer to (1) an
unregistered dealer, (2) a consumer, (3) a registered
dealer for purposes other than sale within the State or sale
in the course of inter-State trade or commerce, or (4) a
registered dealer who is entitled to claim exemption under
S.4(2) of the Act on the sale of such goods within the
State, at the point of sale by the manufacturer himself;
and
(b) When sale is made by such manufacturer to a
registered dealer for purposes of sale within the State,
whether or not to a deptt. of the State or Central Govt., on
which tax under the Act either at full rate or otherwise or
at the rate according to [Ss.5C and 5CC] of the Act is
paid, or sale in the course of inter-State trade or
commerce on which tax under the CST Act, 1956, is paid,
at the point of sale by such registered dealer on the
condition that he undertakes to pay such tax and a
declaration, which shall be furnished to the AA to that
effect in form ST 17 prescribed under the rules is
obtained by such manufacturer from such registered
dealer.”
The referred notification dated 07.03.1994 reads as under:-
“F.4(8) FD/Gr.IV/94-51 dated 7.3.1994
S.O.181.- In exercise of the powers conferred by
sub-section (2) of Section 4 of the Rajasthan Sales Tax
7Act, 1954 (Rajasthan Act No. 29 of 1954), the State
Government being of the opinion that it is expedient in the
public interest so to do, hereby exempts from tax the
purchase of all goods made upto 31st March [1995] by a
registered dealer liable to pay tax under section 5A of the
said Act on the following conditions; namely:-
(i) that the goods so purchased have been sold in the
course of inter-State trade or commerce; and
(ii) that any tax on the purchase of the said goods, if
charged or collected, shall be paid to the State
Government, and if paid to the State Government, shall
not be refunded.”
Sub-section (2) of Section 4 of the Act of 1954,
whereunder the said notification dated 07.03.1994 had been
issued, is also reproduced hereunder for ready reference:
“4(2) Where the State Government is of opinion that it is
necessary or expedient in the public interest so to do, the
State Government may, by notification in the Official
Gazette exempt, whether prospectively or retrospectively
from tax the sale or purchase of any goods or class of
goods or any person or class of persons on such
conditions and on payment of such fee as may be
specified in the notification.”It is not in dispute that initially the said notification dated
07.03.1994 was issued while exempting from tax purchases of
goods upto “31st March 1990”; and the notification was later on
amended to provide exemption from tax purchases of goods
upto “31st March 1995”. The transactions in question had
been of the year 1990-91; and the said notification dated
07.03.1994 would clearly cover the same.
While issuing the said exemption notification on
07.03.1994, the State Government was obviously aware of the
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existence of the notification dated 01.12.1986 and fact was
clearly in the knowledge of the State Government that
purchases would have been made under the declaration in
Form ST-17 also. Per Section 4(2) of the Act of 1954, the
State Government had the authority to exempt from tax,
whether prospectively or retrospectively, the sale or purchase
of any goods or class of goods or any person or class of
persons on such conditions and on payment of such fee as
may be specified. Existing such position, when the State
Government proceeded to consciously issue the notification
dated 07.03.1994, it cannot be said that the benefits
thereunder would not be available for the purchases made
under ST-17. There is no such indication available that the
notification dated 07.03.1994 was restrictive in its operation or
that it was not intended to be available for the purchases made
under ST-17. If the notification dated 07.03.1994 was intended
to be restrictive or inapplicable for the purchases made under
ST-17, such a relevant aspect would have been, and was
rather required to be, spelt out specifically. Instead and other
way round, the said notification has only provided that any tax
on the purchase of the said goods, if charged or collected,
shall be paid to the State Government and if paid to the
Government would not be refunded.
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On a plain reading of the notification dated 07.03.1994,
the intention is manifest that on the purchases of goods as
made by a registered dealer upto 31.03.1995, the levy of
purchase tax was exempted if the goods were sold in the
course of inter-State trade or commerce. The said notification
came to be issued much later i.e., on 07.03.1994 whereas
Section 5-A for levy of purchase tax had existed in the statute
book since long. For this reason, the second clause in the said
notification provides that tax on purchase of the said goods, if
charged or collected, shall be paid to the State Government
and if already paid, shall not be refunded. The obvious
corollary is that if no such tax has been charged or collected,
the same is not to be levied. It is not the case of the
department that the dealers in the present cases had charged
or collected any such purchase tax.
For whatever reason the tax was not charged or
collected, the operation of the said notification dated
07.03.1994 is plain and clear; and in view thereof, there would
arise no question of the revenue suggesting levy of purchase
tax in the present cases. In fact, such was the position very
fairly conceded by the revenue before the Division Bench of
this Court in CWP No. 1650/1993; and the Hon’ble Division
Bench decided the said writ petition with the following order:-
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“1.2.95
Hon’ble Mr.J.R.Chopra,J.
Hon’ble Mr.P.K.Palli,J.
Mr.Rajendra Mehta for the petitioner.
Mr.B.C.Mehta )
Mr.A.K.Rajvanshy), for the respondents.
—
Mr.Rajendra Mehta submits that the Sales Tax
Department itself has issued a notification No.pa.4(8)
FD/Gr.4/94-51 dated 7.3.1994, whereby the purchases
made upto 31.3.1990 have been exempted under
conditions no.1 and 2 mentioned in the aforesaid
notification. The contention of the petitioner is that he
complies with those conditions and, therefore, no
assessment should have been ordered as regards levy of
purchase tax. The situation is not disputed by the learned
counsel appearing for the opposite side.
2. In these circumstances assessment order
(Annex.1) passed on 8.12.1992 for the period 1.4.1989 to
31.3.1990 passed by the respondent no.3 is set aside and
it is hereby ordered that respondents are not entitled to
levy any purchase tax from the petitioner for the period
1.4.1989 to 31.3.1990 if they have already complied with
the two conditions mentioned in the aforesaid notification.
3. The writ petition is disposed of with the above
observations.”The said notification dated 07.03.1994 appears to be
taking in its sweep the transactions of the present nature too
and existing such notification, demand of purchase tax does
not appear justified. There appears no illegality in the order
passed by the Tax Board.
The revision petitions remain bereft of substance and
are, therefore, dismissed. No costs.
(DINESH MAHESHWARI),J.
Mohan/