Karnataka High Court
Karnataka Dairy Development ... vs Commissioner Of Commercial Taxes In ... on 10 June, 1992
Equivalent citations: ILR1992KAR2562
JUDGMENT K. Shivashankar Bhat, J.
1. In respect of two assessment years 1977-78 and 1978-79, the question involved pertains to the declaration filed by the appellant in respect of the sale of condensed milk to Southern Railways.
2. There is no dispute that the transactions in question were inter-State sales. The assessing authority did not accept the "D" forms, but held that the appellant should have produced "C" form declaration. This was reversed by the appellate authority who held that "D" form was sufficient because it was the form furnished by the Indian Railways which is a department of Government of India. This order of the appellate authority was revised by the Commissioner under section 22A of the Karnataka Sales Tax Act, 1957.
3. The question pertains to the effect of section 8. The relevant portion of the Central Sales Tax Act, 1956, reads as follows :
"8. Rates of tax on sales in the course of inter-State trade or commerce. - (1) Every dealer, who in the course of inter-State trade or commerce -
(a) sells to the Government any goods; or
(b) ..............
shall be liable to pay tax under this Act, which shall be four per cent of his turnover.
(2) ..............
(a) ..............
(b) ..............
(2A) .............
(3) ..............
(4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner -
(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or
(b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government :"
4. The appellant was furnished with the declaration in "D" form by the Railways which were produced by the appellant. There is also no dispute about this. According to the Commissioner, Southern Railways being a registered dealer could have issued only "C : forms.
5. Section 8(4)(b) states if the goods are sold to the Government not being a registered dealer ...... a certificate in the prescribed form shall have to be produced, the said certificate is the "D" declaration form. If it is a case of registered dealer, the form is to be the "C" form.
6. According to Mr. E. R. Indrakumar, the appellant had no control over the Indian Railways. Admittedly, the Indian Railways belonged to the Government of India. It has furnished the "D" declaration on its own which assures that it is not a registered dealer. The certificate issued by the railways clearly states that it is not a registered dealer. This statement will have to be accepted by the appellant since the appellant has no control over the registration or otherwise of the dealer who purchased the goods from the appellant.
7. The Commissioner actually relied on the decision of the Supreme Court in District Controller of Stores v. Assistant Commercial Taxation Officer . In the said case, the Railways sold certain unserviceable materials and scrap and because of this and having regard to the definition of the "business" under the Rajasthan Sales Tax Act, the Supreme Court held that the Railways indulged in business by the sale of unserviceable materials and scrap. The definition of the "dealer" was also relied for the said purpose. The Supreme Court was not concerned with the situation as happened in the instant case. The Supreme Court actually did not state that every dealer should be treated as a registered dealer. The phrase referred in section 8(4)(b) is "not being a registered dealer" and under the Central Sales Tax Act, registered dealer is defined as a dealer who is registered under section 7. Under section 7, every dealer liable to pay tax under the Central Sales Tax Act will have to apply and register himself or itself.
8. One cannot assume that every dealer is a dealer liable to be taxed under the Central Sales Tax Act and, therefore, it is not possible to assume that every dealer should be treated as a registered dealer and in such a situation, he should have issued the declaration under form "C" in the case of purchase in the course of inter-State sales. This apart, as already noted above, the appellant has no control over the manner of functioning of the Indian Railways. The Government of India has issued a declaration and prima facie the same shall have to be accepted without being unnecessarily influenced by the technicalities of procedural matters.
9. In the circumstances, we have no hesitation in setting aside the order of the Commissioner and restore the order of the first appellate authority. Appeals are accordingly allowed.
10. Appeals allowed.