Andhra HC (Pre-Telangana)
Balajee Purushottam vs Commercial Tax Officer, Begum Bazar ... on 10 August, 1988
Equivalent citations: [1992]86STC463(AP)
JUDGMENT M.N. Rao, J.
1. The petitioner, a registered dealer in kirana goods, is seeking a writ of certiorari to call for the records pertaining to the assessment order made by the 1st respondent, Commercial Tax Officer, Begum Bazar Circle, Hyderabad, in G.I. No. 8027/83-84 dated August 7, 1984 and quash the same.
2. In respect of the assessment year 1983-84, the petitioner submitted books of accounts. On examining the same, the assessing authority found that in respect of the turnover pertaining to the commodity copra, which is liable to tax at the point of last purchase in this State, the names and particulars of the dealers (purchasers) mentioned in the books of accounts were fictitious, which conclusion was reached after an enquiry and, therefore, a show cause notice was issued to the petitioner calling upon him to show cause why the exemption claimed by the assessee in respect of tax the turnover pertaining to copra should not be rejected. In his objections, the petitioner contended that it was not laid down in the Act or the Rules that a dealer in copra would not be allowed the exemption if he had sold the commodity to unregistered dealers. It was possible that the purchasers were doing clandestine business without registering themselves as dealers and without entering the purchases in their books of accounts with a view to avoiding tax. The assessing authority, after considering the objections raised by the petitioner, held that the so-called purchasers from the assessee were fictitious persons and in that view subjected the disputed turnover of Rs. 11,75,320 pertaining to copra to tax. Challenging the same, this writ petition was filed contending that rule 19-A of the Andhra Pradesh General Sales Tax Rules, 1957 (for short "the Rules'), which prescribes certain details to be submitted by the assessee in form E, travels beyond section 6 of the Andhra Pradesh General Sales Tax Act and, therefore, it is ultra vires. If the rule is struck down as ultra vires, there is no obligation on the part of the assessee to furnish the details regarding registration numbers and addresses of the purchasers. The further contention raised is that the purchasers of the assessee need not be registered dealers and there is no requirement to that effect either in the Act or in the Rules.
3. Copra is a declared goods. Section 6, in so far as it is material for the purpose of this case, says that "the sales or purchases of declared goods by a dealer shall be liable to tax at the rate and, only at the point of sales or purchases specified against each in the Third Schedule on his turnover of such sales or purchases for each year irrespective of the quantum of his turnover in such goods and the tax shall be assessed, levied and collected in such manner as may be prescribed ..............". Item 5 of the Third Schedule says that copra is liable to tax at the point of last purchase in the State at the rate of 4 paise in the rupee. Rule 19-A, which was made to effectuate the object of section 6, reads :
"Every dealer liable to submit a return shall submit a return in form E in duplicate, showing the details of the purchases or sales on which exemption is claimed along with the return or returns he is liable to submit :
Provided that the details of the purchases or sales of the goods specified in the Fourth Schedule of the Act or of the goods liable to tax under the Central Sales Tax Act, 1956, need not be submitted in the return in form E."
4. Form E, which was prescribed under rule 19-A, at the relevant time contained the following columns :
(1) S. No. (2) Description of the goods sold.
(3)(a) Name and full address including the door number and locality.
(3)(b) Registration number with code letters.
(4) Value of the goods sold.
(5) Invoice number and date.
(6) Remarks.
5. From a reading of section 6 of the Act, it is clear that the Legislature intended, so far as declared goods are concerned, the taxable event at the rate and at the point specified in the Third Schedule. The assessment, levy and collection of tax in respect of declared goods, section 6 says, will be in the manner as may be prescribed. What rule 19-A contains is only the method and manner by which the tax on declared goods covered by the Third Schedule could effectively be collected. That is why the rule obligates every dealer to submit a return in form E containing the details of purchases or sales on which exemption is claimed. The word "exemption" occurring in rule 19-A, in our view, is only an inarticulate expression. It is synonymous for non-liability. It is not as if any separate exemption was contemplated by rule 19-A unrelated to what was obligated by section 6.
6. Sri M. S. N. Murthy, the learned counsel for the petitioner, says that inasmuch as rule 19-A travels beyond section 6, it is ultra vires. We are unable to accede to this contention. The rule does not transgress the limits set by section 6. It only seeks to achieve the object laid down in section 6, viz., "the levy of tax in respect of declared goods shall be at the rate and at the point specified in the Third Schedule". Column 3(a) of form E obligates the assessee to mention the name and full address including the door number and the locality of the purchaser. Column 3(b) says that the particulars of registration number with code letters should be specified. These two columns, in our view, do not lay down that the purchasers should be registered dealers. In fact there is no requirement in law that the purchasers must necessarily be registered dealers. Inasmuch as the taxable event is at the point of last purchase in this State, in order to enable the assessing authority to ascertain the details of the last purchasers so as to facilitate easy and effective collection, columns 3(a) and 3(b) are included in form E. If the purchaser happens to be a non-registered dealer and if his name, full address and door number and locality are stated by the assessee, it would be easy for the assessing authority to locate that person and levy tax on the goods purchased by him. Column 3(b), which requires particulars of registration number with code letters, facilitates easy collection of tax from the registered dealers. It is, therefore, clear that neither rule 19-A nor form E prescribed under the rule lays down that the assessee should sell the declared goods only to registered dealers. Neither the rule nor form E is repugnant to section 6 and, therefore, they cannot be said to be ultra vires section 6.
7. In this connection, we must also state that section 6 being the charging section, it should receive strict interpretation. But whereas rule 19-A, which is a machinery provision, should be interpreted liberally, so that the object of the charging section may not be frustrated.
8. In Associated Cement Co. Ltd. v. Commercial Tax Officer [1981] 48 STC 466, the Supreme Court while dealing with the question of interpretation of the provisions of taxing statutes stated the law thus :
"It is settled law that a distinction has to be made by courts while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous construction. The courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated."
9. The Supreme Court also cautioned :
"It is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose having a full view of it. Wherever the intention to impose liability is clear courts ought to have no hesitation in giving what we may call a commonsense interpretation to the machinery sections so that the charge does not fail."
10. Sri M. S. N. Murthy, the learned counsel for the petitioner, relying on the authority of Venkata Subbaiah & Co. v. State of A. P. , contends that the assessment in question was had since the assessing authority proceeded on the assumption that it was obligatory on the part of the assessee to sell copra only to registered dealers. In Venkata Subbaiah's case , the Commercial Tax Officer granted exemption in respect of the turnover pertaining to the commodity - coconuts and copra purchased within the State, accepting the lists of purchasers furnished by the dealer. After four years, the order of assessment was revised by the Deputy Commissioner on the ground that the dealer did not produce any recorded evidence before the assessing authority. The order under revision was set aside by the Sales Tax Tribunal on appeal and a de novo enquiry was ordered on the ground that no enquiry or verification was done by the assessing authority to establish the authenticity of the claim put forth by the dealer before granting exemption and the records did not disclose the details in that regard. This court set aside the order of the Tribunal on the ground that the Deputy Commissioner, while revising the order of assessment, did not record a finding that the sales in question were not true or genuine and, therefore, "there was no occasion for the Appellate Tribunal to remand the matter for further enquiry as to whether the sales were in fact effected to other dealers as contended by the assessee". The question that fell for adjudication in that case is of no assistance to the petitioner herein.
11. The learned counsel for the petitioner also relied upon the judgment of a Division Bench of this Court in Special Appeals Nos. 4, 5 and 6 of 1987 dated March 1, 1988 reported as Machilipatnam Central Consumers Co-operative Stores Limited v. Commissioner of Commercial Taxes . Based upon certain material seized at the time when the raid was conducted by the sales tax authorities and also taking into consideration certain statements recorded by the authorities without the knowledge of the assessee, huge penalties were levied. That order was set aside by the Division Bench in those special appeals on the ground that the assessee was not given an opportunity to establish his non-liability to tax.
12. Coming to the facts of the present case, the assessing authority, after making verifications with reference to the lists of dealers furnished by the assessee, came to a prima facie conclusion that the dealers were fictitious; they were neither registered dealers nor unregistered dealers. Thereafter, a show cause notice was issued to the petitioner bringing to his notice that the dealers mentioned by him were not genuine dealers. It must be stated in this context that the petitioner in the details furnished by him also mentioned the registration numbers of the purchasers, which necessarily implies that they were all registered dealers. Out of 134 names verified by the assessing authority, only one person was found to be a registered dealer, but on enquiry it was found that even that dealer did not purchase copra from the petitioner. It is not as if the petitioner wanted further opportunity to adduce evidence by producing the purchasers before the assessing authority in order to establish his non-liability to tax. The learned counsel says that there was no obligation on the part of the petitioner to furnish the registration numbers of the purchasers and merely because the enquiry disclosed that those purchasers were not registered dealers, no conclusion follows that they did not purchase the commodities from the petitioner. The learned counsel further says that the purchasers could as well be non-registered dealers, but by mistaken understanding of the legal position the petitioner had mentioned the registration numbers of the purchasers. We are unable to appreciate this contention. Having given the registration numbers of the purchasers, which were found to be false and the purchasers fictitious persons, it was not open to the petitioner to turn round and say that still he would establish that those purchasers could be non-registered dealers. Further, it must be mentioned that before the assessing authority, no attempt was made by the petitioner to produce any of the so-called purchasers to establish his claim that he was not liable to tax. He did not make any request for an opportunity to adduce evidence in support of his plea that the disputed turnover was not liable to tax. It is true that the assessing authority has examined the entire question from the view point that the purchasers from the petitioner were registered dealers. Such an examination was inevitable having regard to the fact that the petitioner himself stated in the lists furnished by him that the purchasers were registered dealers. Therefore, the view taken by the assessing authority cannot be disturbed on this count. Barring one or two stray instances, all the other purchasers were claimed by the petitioner as registered dealers. In the circumstances, the question of affording any opportunity now to the petitioner to adduce evidence before the assessing authority or the appellate authority would not arise.
13. For these reasons, the writ petition fails and accordingly the same is dismissed. No costs. Advocate's fee Rs. 300.
14. Writ petition dismissed.