Madhya Pradesh High Court
Manish Traders vs Additiional Commissioner & Anr. ... on 14 March, 2014
Author: A.K. Sharma
Bench: A.K. Sharma
HIGH COURT OF MADHYA PRADESH : AT JABALPUR
Writ Petition No : 27467 of 2003
Manish Traders
- V/s -
Additional Commissioner and Another
Present : Hon'ble Shri Justice Rajendra Menon.
Hon'ble Shri Justice A.K. Sharma.
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Shri H.S. Shrivastava, Senior Advocate, with
Shri S.K. Jain for the petitioner.
Smt. Nirmala Nayak, Govt. Advocate, for the respondents.
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Whether approved for reporting: Yes / No.
ORDER
14/03/2014 Challenge in this petition under Article 226 and 227 of the Constitution is made by the registered dealer to orders passed by the assessing authority namely the Assistant Commissioner, Commercial Tax vide assessment order dated 7.3.2003, in the matter of imposing liability on the assessee for payment of entry tax for the period 1.4.1998 to 31.3.1999; and, the order passed by the revisional authority under section 62(1), rejecting the revision filed by the petitioner assessee. 2- Petitioner claims to be a proprietary concern engaged in the business of sale and purchase of Soya Oil. It is stated that they purchased Soya Oil from M/s MP Glychem Industries Limited, Gadarwara. The petitioner purchased the aforesaid oil for carrying out business pertaining to sale of Vanaspati, Edible Oil, Ghee, Sugar, Salt etc. Petitioner filed his return for the first, second and third quarter and paid entry tax in accordance to his liability. Assessment was made by respondent No.2 Writ Petition No :: 27467 / 2003 2 Manish Traders Vs. Addl. Commissioner, Commercial Tax and another.
and at the time of assessment it was the case of the petitioner that purchase of refined Soya Oil from M/s MP Glychem Industries Limited, Gadarwara, for the purpose of entry tax under the MP Sthaniya Kshetra Mein Mal Pravesh Par Kar Adhiniyam, 1976 (hereinafter referred to as „Entry Tax Act‟), are tax paid, as the said dealer is a registered dealer. However, it seems that in the bills as the registered dealer namely - M/s MP Glychem Industries Limited, Gadarwara did not disclose the fact of payment of entry tax on the goods, as required under section 7(1), claim of the petitioner was not accepted and the petitioner was subjected to payment of entry tax and interest under section 26(4)(a). Challenging the order of assessment, revision was filed and the same having been also rejected, this writ petition has been filed.
3- It is the case of the petitioner that M/s MP Glychem Industries Limited, Gadarwara is a registered dealer and as they had affected entry of the goods into the local area and paid entry tax before it was sold to the present petitioner, petitioner is not liable to pay entry tax. However, only because statement as required under sub-section (1) of section 7 was not submitted, without any inquiry and without proper assessment the tax could not be imposed upon the petitioner. That apart, it was submitted that when the notice was served by the petitioner on the said dealer - M/s MP Glychem Industries Limited, Gadarwara, they affixed a stamp on the bill stating „entry tax paid‟. This was submitted by the petitioner to the revisional authority, but ignoring the same the liability has been imposed.
4- Placing reliance on a judgment of the Full Bench of this Court, in the case of Mohan Singh and sons Vs. Commissioner of Sales Tax, MP - (1996) 29 VKN 243, learned Senior Advocate argued that the assessing authorities have misconstrued the provisions of sub- section (1) of Section 7, which mandates that if a registered dealer in the due course of business manufactures „goods‟ specified in Schedule II, in such a manner that „goods‟ become „local goods‟ in relation to that area, he has to specifically state the same and when such „goods‟ are sold, it remains a „local good‟ in relation to such „local area‟ and that no „entry Writ Petition No :: 27467 / 2003 3 Manish Traders Vs. Addl. Commissioner, Commercial Tax and another.
tax‟ is payable. Contenting that in the present case, the onus of payment of entry tax is on M/s MP Glychem Industries Limited, Gadarwara and as they have discharged this liability, imposition of liability and interest on the petitioner is unsustainable. That apart, even if any liability is to be fixed, it should be fixed on M/s MP Glychem Industries Limited, Gadarwara and for the same enquiry and burden of proof as laid down by the Full Bench in the case of Mohan Singh (supra) should have been applied, argument is made to say that the order passed is unsustainable. 5- Smt. Nirmala Nayak, learned Government Advocate, refuted the aforesaid and argued that as assessing authority and the revisional authority have based their finding after considering judgment referred in the case of Mohan Singh (supra), there is no error in the matter.
6- We have heard learned counsel for the parties and we are of the considered view that in dealing with the matter, an error apparent has been committed by the respondents, which warrants interference. 7- Section 3 of the Entry Tax Act, as is applicable in the State of MP deals with various instance and incidents of tax. As far as goods specified in Schedule II to the Act is concerned, „entry tax‟ on such goods are levied under section 3 of the Entry Tax Act, if in the course of his business a dealer brings into the local area for consumption, use or sale etc any material liable for payment of tax. Such tax (entry tax) is to be paid by every dealer liable to pay tax under the Sales Tax Act. The proviso to the said Act deals with the definition of local area and various other aspects of the matter. If the entire provisions of the Act is analysed, it would be seen that when „goods‟ are sought to be moved from one local area to another, the liability to pay entry tax is on the registered dealer who causes the entry at the first instance. If he seeks exemption from deduction, it is for him to show that the taxable event has not occurred or that the goods have already moved from one local area to another and enabling him to draw an inference that taxable event had occurred with liability of another registered dealer, who was to pay tax, in the present case - M/s MP Glychem Industries Limited, Gadarwara.
Writ Petition No :: 27467 / 2003 4Manish Traders Vs. Addl. Commissioner, Commercial Tax and another.
8- It has been held by the Full Bench in the case of Mohan Singh (supra), in paragraphs 15 and 16, that this burden can be discharged by the purchasing registered dealer, by producing the bill he receives from the selling registered dealer which does not contain a rubber stamp endorsement as required under section 7 of the Act. It is held in paragraph 15 of this judgment that by not affixing the rubber stamp endorsement on the bill, the selling registered dealer makes an implied representation that the taxable event has already occurred with liability already created either in him or in a registered dealer which dealt with the goods previously and, therefore, the proviso (iv) to section 7(1), if invited.
9- It has been held by the Full Bench that absence of rubber stamp endorsement on the bill is entitled to some weight and by producing a bill with such a stamp, the assessee has discharged the burden on him. In the present case, the bill produced at the time of revision did show discharge of this burden, as the rubber stamp was affixed.
10- However, in paragraph 16, the Full Bench further goes to say that absence of rubber stamp endorsement cannot, in all cases, be conclusive, and the burden of proof in such cases will not shift on the assessee, but it is for the revenue to collect material after conducting proper inquiry. In paragraphs 16, 17 and 18, the learned Full Bench has dealt with the matter in the following manner:
"16. Absence of rubber stamp endorsement cannot, of course, be conclusive. There may be a variety of reasons why the rubber stamp has not been affixed. One is that goods are really not local goods and tax has been paid or tax liability has been incurred. Another is that seal has not been affixed on account of negligence or carelessness. The assessee certainly can take advantage of the prima facie import of absence of rubber stamp. It is then for the Revenue to collect materials to indicate that the goods had Writ Petition No :: 27467 / 2003 5 Manish Traders Vs. Addl. Commissioner, Commercial Tax and another.
not subjected entry into the local area and taxable event had not occurred earlier and that absence of rubber stamps is not deliberate and is accidental or negligence.
17. We are respectfully of the opinion that the decision in CST, MP Vs. Garg Dal Mill, Lashkar (supra) did not consider the earlier decisions of the Court and does not lay down the correct law. The decision in Renomal Ramesh Kumar Vs. State of MP (supra) lays down the law correctly.
18. For the reasons indicated above, we hold that the question referred to in MCC No. 454 of 1986 and the first question referred to in other three cases have to be answered in the negative and the second question referred to in these three cases has to be answered in the negative i.e.. in favour of the assessee and against the Revenue. The authorities were not right in ignoring the evidentiary value of the non- affixture of the rubber stamp endorsement on the bills as required under section 7 of the Act. In the face of such non- affixture, the burden is on the revenue to show that the goods are local goods of which the assessee caused entry to be made into another local area."
(Emphasis supplied) 11- Keeping in view the aforesaid principle and the law as laid down by the Full Bench, we are of the considered view that imposing liability and interest on the petitioner in the facts and circumstances of the case was wholly unwarranted and illegal. This is a case where even though the bill with rubber stamp was produced at the time of hearing before the revisional authority, the revisional authority merely brushed aside the same and did not cause any inquiry into the matter and imposed liability without correctly appreciating the provisions of section 7 and the law laid down by the Full Bench in the case of Mohan Singh (supra).
Writ Petition No :: 27467 / 2003 6Manish Traders Vs. Addl. Commissioner, Commercial Tax and another.
12- In accordance to law, it was the liability of M/s MP Glychem Industries Limited to discharge the tax burden and this could not be shifted on the present petitioner.
13- Under such circumstances, both the orders - order of the assessing authority and the order of the appellate authority being unsustainable are quashed.
14- The petition stands allowed and disposed of. The impugned orders-dated 7.3.2003 and 24.3.2003 are quashed.
( RAJENDRA MENON ) ( A.K. SHARMA )
JUDGE JUDGE
Aks/-