Calcutta High Court
Swarmal Choudhury vs Commercial Tax Officer And Ors. on 10 August, 1987
Equivalent citations: [1988]71STC404(CAL)
JUDGMENT Ajit Kumar Sengupta, J.
1. This writ application is directed against the refusal of the Commercial Tax Officer in issuing declaration forms to the petitioner, a registered dealer. The petitioner carries on business in grading and processing of tea. The factory was installed only in the year 1979 at Jalpaiguri with plant and machinery. The production in the said factory started on and from October, 1979 and the first sale within the State of West Bengal out of the production of the said factory took place on 22nd October, 1979. On 22nd December, 1979 the petitioner was granted registration certificate under the Bengal Finance (Sales Tax) Act, 1941. The petitioner applied for eligibility certificate under Rule 3(66) of the (West) Bengal Sales Tax Rules which grants tax holiday to newly set-up industrial unit on fulfilment of certain conditions laid down in the said Rules. According to the petitioner, the petitioner satisfied all the conditions under Rule 3(66) and applied for exemption under the said Rules. The Assistant Commissioner, Commercial Taxes, Jalpaiguri, the respondent No. 2, after examining all the relevant records and documents and after being fully satisfied that the petitioner was engaged in the business of manufacturing goods, allowed the petitioner to avail exemption under Rule 3(66) for the period from 1st April, 1980 to 31st March, 1981. Such exemption was also granted by renewing "eligibility certificate" for a further period of 1 year from 1st April, 1981 to 31st March, 1982. It may be mentioned that "eligibility certificate" was initially granted on 11th May, 1981 for the period from 1st April, 1980 to 31st March, 1981 and it was renewed thereafter on 1st December, 1983 for the subsequent period, that is to say, from 1st April, 1981 to 31st March, 1982. On 12th December, 1983 the petitioner made an application for renewal of the "eligibility certificate" for the period from 1st April, 1982 to 31st March, 1983. On 15th February, 1985 a notice was issued from the office of the Assistant Commissioner, Commercial Taxes, communicating the rejection of the application for renewal of "eligibility certificate" for the period from 1st April, 1982 to 31st March, 1983. Thereafter the petitioner filed revisional petition against the order of the Assistant Commissioner, Commercial Taxes, rejecting the application for renewal of the eligibility certificate.
2. On 2nd May, 1985, the petitioner made an application for declaration forms. The Commercial Tax Officer withheld the issues of declaration forms on the ground that the revision petition against the rejection of "eligibility certificate" was pending before the Additional Commissioner of Commercial Taxes. In the month of October, 1985, the petitioner once again applied for declaration forms. This time however rejection was made on the ground that the petitioner has not paid taxes after rejection of the renewal application of the eligibility certificate on 11th March, 1986; notice of assessment under the Bengal Finance (Sales Tax) Act, 1941 and the Central Sales Tax Act, 1956 was issued to the petitioner for the 12 months ending 30th September, 1983 and 30th September, 1984.
3. The case of the petitioner is that the petitioner was being reminded by its sellers for issue of declaration forms. The petitioner moved this Court and an order was passed by S. C. Sen, J., directing the petitioner to pay Rs. 32,500, and further directed the sales tax authority to issue declaration forms on the commensurate value of Rs. 32,500. In compliance with the said order the sales tax authority issued declaration forms against the purchase of Rs. 15,00,000 although on the basis of the commensurate value the declaration forms should be issued on Rs. 32,50,000.
4. In August, 1986 the petitioner made applications for renewal of the "eligibility certificate" for the periods 1983-84, 1984-85, 1985-86 and 1986-87.
5. The petitioner again applied for declaration forms against the purchase for the periods governed by the applications for renewal of eligibility certificate which have been kept pending. The Commercial Tax Officer however on 13th November, 1986 refused to issue further declaration forms. The petitioner again made representation to the Commercial Tax Officer for issue of declaration forms but no action was taken. The representation before the Additional Commissioner of Commercial Taxes also failed. This application was moved on 26th February, 1986.
6. No affidavit has been filed on behalf of the respondents but the respondents have relied on the affidavit filed in the appellate side matter which came before S. C. Sen, J. It has been stated by Mr. Bose, learned Advocate for the State, that the State would rely on the said affidavit as the facts and circumstances of the case are similar. He has also submitted that this application is liable to be dismissed inasmuch as the petitioner once invoked the jurisdiction of this appellate side and failing there, he has moved in the original side on the self-same allegations. He has also submitted that the stand taken by the department has been fully explained in the said affidavit which may be treated as part of the proceeding.
7. Mr. Bajoria, learned counsel appearing for the petitioner, has submitted that in the case before Mr. Justice Sen the grievance of the petitioner is against rejection of the applications for renewal of the eligibility certificate forms. He has also submitted that there is no question of any conflict of decision as points are not similar.
8. I shall revert to the contention raised by the learned Advocate for the parties later. Before that it is necessary to set out the stand which has been taken by the respondents in the affidavit affirmed in C. R.... of 1985 by Raghuranjan Gosal, Assistant Commissioner, Commercial Taxes, Jalpaiguri, sometime in February, 1986.
9. In the said affidavit it has been alleged that since after rejection of the petitioner's prayer for renewal of the eligibility certificate on and from 1st April, 1982 he was under legal obligation to pay tax in respect of his sales on and from the said 1st April, 1982 which has not been done. I further say that having not paid tax in respect of the sales, the petitioner became a defaulter within the meaning of law in the matter of submission of his return enclosing therewith the challan showing proof of payment of taxes in accordance with such returns as enjoined in law and accordingly the petitioner was not entitled to obtain any declaration forms from the department in order to reap the benefit of purchase of goods at the concessional rate of tax. The petitioner could no longer claim exemption in respect of his sales in view of his possessing no valid eligibility certificate as enjoined in law on and from 1st April, 1982. Rule 27AA(2)(c) of the Bengal Sales Tax Rules, 1941 specifically states that if the applicant, for declaration forms, has at the time of making the application defaulted in furnishing any return under the Bengal Finance (Sales Tax) Act, 1941 or the West Bengal Sales Tax Act, 1954 or the Central Sales Tax Act, 1956 together with the receipted challan showing payment of tax, etc., due from him according to such return or returns, for the furnishing of which the prescribed date or dates or the extended date or dates if any have already expired, the Commercial Tax Officer shall withhold the issue of declaration forms to him. In the context of such positive provision in the statute all allegations of the petitioner are meaningless, mischievous, motivated as well as of no consequence.
10. It is also alleged in the said affidavit that if the petitioner's sales for the said period (from 1981-82 to 31st July, 1986) be taken at the figure as alleged, then the entire sales of Rs. 32,50,000 would be taxable at 8 per cent unless he has secured declaration forms in support thereof in the meantime which can only be ascertained upon verification of the sales. In the event the said sales are not so supported by declarations, the tax that would be due and payable by the petitioner would amount to Rs. 2,60,000 approximately which the petitioner should pay in order to obtain declaration forms as may be required by him.
11. The contention of the respondents is that if taxes are outstanding the respondents are not obliged to issue declaration forms. As soon as the application for renewal of the eligibility certificate was rejected, the petitioner is bound to pay the dues on the basis that no exemption is granted to the assessee. It has also been contended that investigation is being made as to the activities of the petitioner and unless the petitioner makes payment of the dues no declaration form can be issued to the petitioner. It has also been urged that in terms of the order of S. C. Sen, J., a declaration form commensurate with the taxes paid had already been issued and no further declaration forms can be issued.
12. On the other hand Mr. Bajoria, learned counsel for the petitioner, has submitted that in this case renewal of eligibility certificate has been refused and the matter is pending before the revisional authority. So long as the revisional authority does not decide the issue one way or other, the petitioner is entitled to the declaration forms on the basis of its existing status. He has also submitted that taxes are being paid on the basis of the returns submitted and the question of any tax remaining outstanding does not arise at all. He has also submitted that if upon assessment any tax is outstanding that cannot be a ground for refusing to issue declaration forms. The learned counsel for the parties have relied on several decisions which I shall presently refer to.
13. The eligibility certificate in this case was issued and also renewed for one year. The eligibility certificate was issued for the period from April, 1980 to 31st March, 1981. For the subsequent period, i.e. to say, for the period from 1st April, 1981 to 31st March, 1982 certificate was issued. The application for renewal of the eligibility certificate for the subsequent period, i. e. to say, from 1st April, 1982 to 31st March, 1983 was made on 12th December, 1983. It was only on 18th February, 1985 the petitioner was informed that his application for the renewal of the eligibility certificate for the period from 1st April, 1982 to 31st March, 1983 was rejected. We have therefore to take into account the period between 12th December, 1983 and 18th February, 1985 in considering question of issuance of declaration forms.
14. The petitioner applied for declaration forms for the purchases made mostly prior to 18th February, 1985. The application form for declaration forms have been refused by the Commercial Tax Officer on two occasions as follows:
Order dated 2nd May, 1985.
Sri Sawarmal Chowdhury, Partner appears in connection with declaration forms; list of purchases was already submitted by the dealer.
The dealer is a registered S. S. I. Unit. He prayed for renewal of eligibility certificate to the competent authority (i.e. ACCT/JP). His prayer for E. C. has been rejected by ACCT/JP by an order dated 7th November, 1984 and communicated to me by his office Memo No. CE-3/81-82/154/1 dated 5th February, 1985. The dealer is now required to deposit due taxes as per provisions of laws. It is stated by order of ACCT/JP. Hence his application for declaration forms is withhold till receipt of order of revision from Addl. CCT. The dealer is requested to come to take declaration after the matter is settled by the Addl. CCT. informed.
Sd/- K. Mondal Commercial Tax Officer, Jalpaiguri Charge.
Order dated 31st October, 1985.
It appears that the learned A. C, JP., Mr. K. N. Soren rejected the petition for renewal of E. C. on 7th November, 1984. It appears that the dealer has not paid any tax for any quarter after his renewal petition is rejected. But he should have paid tax when the application for E. C. was rejected. The dealer is still claiming the sale covered under Rule 3(66).
It seems to me the returns submitted are not complete.
So the petition for issuing of declaration forms is rejected.
Rule 27AA(2)(c) of the Bengal Sales Tax Rules, 1941 provides as follows:
If the applicant for declaration forms has at the time of making the application defaulted in furnishing any return or returns, together with the receipted challan or challans showing payment of the tax, surcharge and additional surcharge due from him according to such return or returns, for the furnishing of which the prescribed date or dates, or the extended date or dates, if any, have already expired, the Commercial Tax Officer shall withhold the issue of declaration forms to him until such time as he furnishes--
(i) such return or returns, together with such receipted challan or challans, and (ii) any other return or returns, together with the receipted challan or challans showing payment of the tax, surcharge and additional surcharge due according to such return or returns for the furnishing of which the prescribed date or dates or the extended date or dates, if any, may have expired after the date of the application:
Provided that in a case coming under this clause the Commercial Tax Officer may, instead of withholding declaration forms, issue such forms in such numbers and subject to such conditions and restrictions as he may consider reasonable, to an applicant, if in the opinion of the Commercial Tax Officer it is desirable in the interest of the collection of sales tax revenue to grant time to the applicant to pay up the arrears of tax, surcharge and additional surcharge in one lump or in instalments.
15. This rule provides that an applicant for declaration form has to pay taxes due from him according to such return or returns. According to the returns submitted by the petitioner nothing is due. If because of the rejection of renewal of eligibility certificate the petitioner has further liability to pay taxes such taxes would be due only upon the assessment being made. At the time of issuance of the declaration forms the Commercial Tax Officer has to take into account the facts prevalent during the period when the dealer made purchases and what has not happened subsequently. Usually declaration forms are asked for by the dealer before the assessments of the purchasing dealers are completed. There is thus a passage of time between the purchases made and the application for declaration forms. At the material time when the purchases were made by the petitioner, the petitioner was either having eligibility certificate or his application for renewal of the eligibility certificate was pending. The petitioner therefore filed returns showing the taxes payable on the basis of the eligibility certificate or on the basis that the eligibility certificate would be continued as application for renewal was pending. It is not disputed that the petitioner paid taxes on the basis of such returns filed although the application for renewal of the eligibility certificate was rejected sometimes in 1984. It was not communicated until February, 1985. The petitioner was not aware before that date that his application was rejected. The petitioner was not at fault. No blame can be attributed to the petitioner for delay in communication of the order of rejection. Mr. Justice Suhas Chandra Sen in the case of Burlap Laminating & Plastic Private Ltd. v. Commercial Tax Officer, China Bazar Charge reported in (1987) 20 STA 132 (Cal) has observed as follows:
In my judgment, in a case where the petitioner was originally granted an eligibility certificate, he would continue to enjoy the benefit of such certificate so long as his application for renewal remains undisposed of, the reason being that the petitioner having made a valid application in good time for renewal, cannot be refused the benefit of renewal in a case where the Assistant Commissioner has been guilty of delay in disposing of the application. Any delay on the part of the Assistant Commissioner to dispose of the application must enure to the benefit of the petitioner.
16. Mr. Justice Sen in the said judgment considered the meaning of the word "due" appearing in Rule 27AA(2)(c) and observed thus:
After rejection of his prayer for grant of eligibility certificate, the petitioner cannot claim that the tax due on his return must be calculated on the basis of the return filed by him on the footing that he had got in his possession a valid certificate of eligibility in form XXXVI. This construction, in my judgment, cannot be reasonably made.
It was contended that the word 'benefit' must be confined to the benefit of calculation of tax at the time of making the assessment on the basis of which the return has been filed. In my opinion, the word 'benefit' cannot be construed so narrowly. The benefit conferred by Rule 3(66) is exemption from taxation on fulfilment of certain conditions. Whenever the question of tax calculation comes in at whatever stage, it has to be found out whether the petitioner is entitled to the benefit of tax exemption. In this case, according to the turnover disclosed by the petitioner, the petitioner will have to pay tax without any exemption unless he can show that he is entitled to the exemption claimed. At the time of grant of declaration forms, the question that will crop up is whether the tax due on the return filed by the petitioner has been paid. If the petitioner does not have any exemption certificate, tax payable will be one figure. If the petitioner is now allowed exemption certificate, the tax payable will be quite a different figure. Therefore, the tax due must be tax due on the facts and circumstances of a case obtaining at the time when the Commercial Tax Officer applies his mind to the question of grant of declaration forms.
17. Mr. Bose, learned Advocate appearing for the respondents, has heavily relied on the aforesaid observation of S. C. Sen, J., on the word "due". It is his submission that in view of the said judgment this Court cannot but hold that the petitioner is not entitled to any declaration forms as the application for renewal of the eligibility certificate has been rejected and accordingly the petitioner is liable to pay the tax due as if no exemption was allowed to him. It is no doubt true that the observation made by S. C. Sen, J., in the said judgment does help the respondents. But before S. C. Sen, J., all other relevant decisions were not cited, and if those decisions had been cited his decision might have been different. This Court should not take a view contrary to what has been held earlier by another learned Judge sitting singly unless it can be shown that either certain relevant decisions were not cited or subsequent to the said decision, a Division Bench has taken a different view on the similar question. It can never be the rule that since a matter has been decided by another learned Judge, no other Judge hearing a similar matter can take a different view under any circumstances. In this connection reference was made to the judgment of this Court in the case of Rasoi Products v. Commercial Tax Officer, Skyambazar reported in [1982] 51 STC 248. In that case the learned Judge did not accept the earlier judgment on the ground that relevant notification as also the provisions and rules of the West Bengal Sales Tax Act, 1954 had not been placed before the learned Judge delivering the judgment earlier.
18. Reliance has also been placed in the case Of Bharat Process & Mechanical Engineers Ltd. Assistant Apprentices v. Bharat Process and Mechanical Engineers reported in 1987 (1) CLJ 157.
19. The decision of the Division Bench of this Court in the case of Ram Ishwar Bhan v. Commercial Tax Officer reported in (1987) 20 STA 205 has taken a view contrary to what Mr. Justice Sen held in Burlap Laminating (1987) 20 STA 132 (Cal). There the Division Bench held as follows:
On a consideration of the facts as on record, the statutory provisions as noted above and the submissions of the learned Advocate for the parties, it appears to us that the contentions raised on behalf of the appellant are of substance and cannot be brushed aside. Admittedly, the respondent No. 1 has power to withhold the issue of declaration forms only under Rule 27AA(2)(c). He could withhold the issue of the declaration forms only on the ground that the appellant had defaulted in furnishing any return with receipted challans showing the payment of tax due from him according to such return or returns, for the furnishing of which the dates had expired. If the respondent No. 1 came to the conclusion that the appellant had not made bona fide use of the declaration forms previously issued to him then the respondent No. 1 could have rejected the application which he has not done.
Under the statutory provisions, the respondent No. 1 was not entitled while issuing declaration forms to call upon the appellant to rectify his returns and pay additional taxes. This is not provided in Rule 27AA of the Rules nor in any other section of the statute.
20. In the case of Jaipur Udyog Ltd. v. Commissioner of Income-tax, Delhi and Rajasthan reported in [1969] 71 ITR 799 (SC) the appellant-company submitted its return for the assessment year 1963-64 disclosing an income of Rs. 74,52,402 and claiming a set-off of Rs. 1,03,03,935 being the aggregate of losses it had suffered in earlier years. The losses claimed by the company for the years 1954-55 and 1957-58 to 1959-60 were in excess of the amounts determined in regular assessments and the profits for the years 1955-56 and 1956-57 as determined in the regular assessments were in excess of those returned by it. Appeals were pending against the orders of assessment. The Income-tax Officer made a provisional assessment on the company under Section 141 of the Income-tax Act, 1961, recomputing the aggregate losses of earlier years on the basis of the computations in the regular assessments for the years 1954-55 to 1959-60 and, allowing a set-off of only Rs. 39,89,731 towards losses carried forward, raised a demand for Rs. 8,73,973. For the assessment year 1964-65 the company submitted a return disclosing an income of Rs. 59,89,757 and claimed to set-off Rs. 36,01,735 as losses of earlier years carried forward and paid Rs. 12,12,595 under self-assessment. The Income-tax Officer passed a provisional assessment order computing the tax on Rs. 59,89,757 without any set-off of losses and raised a demand for an additional sum of Rs. 17,32,768. On the basis of the provisional assessment for the year 1964-65, the Income-tax Officer passed an order for payment of advance tax under Section 210 for the year 1965-66.
Thus the Supreme Court held as follows:
If it be assumed that provisional assessment has to be made in accordance with and subject to the provisions of the Act, distinction between a provisional assessment and a regular assessment gets completely blurred. The scheme of Section 141 is to call upon the assessee to pay tax provisionally at the appropriate rate on what he admits is his taxable income, subject to the benefit of the allowances under Sub-section (2). The section does not permit an enquiry to be made whether the total income returned by the assessee exceeds the amount admitted by him, nor whether the allowances or deductions claimed are admissible. If there be a discrepancy between the return made and the accounts and documents accompanying the return, the Income-tax Officer may ask the assessee to explain the discrepancy, but he must make a provisional assessment on the basis of the return initially made or clarified and the accounts and documents filed. He cannot make a provisional assessment by holding that certain claims made by the assessee arc in law unjustified. If it transpires that the assessee has without reasonable cause concealed particulars of his income or has furnished inaccurate particulars of his income, it may be open to the Income-tax Officer to impose penalty upon him after the regular assessment is completed. But it is not open to him to determine whether there has been any concealment of particulars of income or to decide whether claims which have been made are unwarranted. In the view we have expressed, the Income-tax Officer was not justified in holding that the claim made by the company for carrying forward and seeking to debit against Rs. 74 lakhs odd an amount of Rs. 103 lakhs odd was liable to be rejected.
21. The Supreme Court also held that it was not open to the Income-tax Officer in the provisional assessment under Section 141 to reject or ignore the claim of the company for carry forward and set-off of the losses.
22. In the case of Salar Jung Sugar Mills Ltd. v. State of Mysore reported in [1971] 81 ITR 509, the Mysore High Court considered Section 20(1) of the Mysore Agricultural Income-tax Act, 1957 which is in pan materia with Section 141 of the Income-tax Act, 1961. It was held in that case that under Section 20(1) of the Mysore Act the assessing authority has power only to call upon the assessee to pay tax provisionally on what he admits as his taxable income.
23. In my judgment Rule 27AA(2)(c) does not contemplate a case of tax which may be due after assessment is made. In considering the application for declaration forms one has to look at the position as on the date of the purchases made in respect whereof the declaration forms have been asked for. Until 18th February, 1985 no order was communicated to the petitioner rejecting his application for renewal of eligibility certificate. Accordingly, during the said period, the question of any other tax due on the return even accepting the observation of S. C. Sen, J., cannot arise. It is not the case of the respondents that the petitioner has not used the declaration form bonafide nor was it the case that the petitioner defaulted in furnishing any return with receipted challan showing payment of tax. That apart, merely because the application for renewal of the eligibility certificate has been rejected, the petitioner is under no obligation to pay the tax not yet determined or assessed specially when the revision petition against the rejection order was pending before the higher authority. The petitioner can proceed on the basis of the return already filed regarding his dues until the matter is finally disposed of by the appropriate authority. The rejection of an application for renewal of the eligibility certificate imposes burden on the dealer but in this case as I said it was not until 18th February, 1985 that the order rejecting the application for renewal of eligibility certificate was communicated. The petitioner could not foresee at least till 18th February, 1985 what however happened to his application for renewal of eligibility certificate. Thereafter he took recourse to the remedy provided under the Act. In such a case it is the duty of the concerned authority to dispose of the application and the appeal or revision preferred against any decision on such application as expeditiously as possible so that the dealer may know exactly the position and the revenue can also collect the tax as may be found due.
24. At the time of issuing of the declaration form the sales tax authority can only consider whether the dealer has defaulted in furnishing the return. The correctness of the return can only be questioned at the time of the assessment and not at the time of the issuance of the declaration forms. At the stage of issuance of the declaration forms the authorities are concerned to find out whether the declaration forms were used bona fide and whether the dealers have defaulted in furnishing return. When the purchases have been made by the dealer, unless the declaration forms are made available to the dealer the purchasing dealers will have to pay tax which have to be reimbursed by the dealer. The authorities concerned cannot go behind the rule and demand taxes which have not yet been assessed as the assessment would depend on the finality of the order rejecting the renewal of the eligibility certificate.
25. In the case of Mehta Ramnath v. State of Bihar reported in [1972] 30 STC 477 (Pat) a dealer registered under the Bihar Sales Tax Act, 1959. and the Central Sales Tax Act, 1956, and carrying on the business of selling goods in Bihar as also in the course of inter-State trade or commerce, applied to the sales tax authority for the supply of permits in form XXVIII-B to be used in accordance with Rule 31(1A) of the Bihar Sales Tax Rules, 1959. The officer, however, passed an order that under Rule 31-C(b) no permit forms could be supplied to the petitioner unless he filed the return for a particular month and paid the admitted tax on the same. The petitioner thereupon filed a nil return for that month. The officer refused to supply the permits to the petitioner on the ground that the petitioner had purchased some goods liable to purchase tax in the previous month and he had not paid, and had expressed his inability to pay, the purchase tax due on the same. The petitioner thereupon filed a writ petition attacking the constitutional validity of Rule 31-C(b) and asserting that the order of the officer was bad and erroneous in law. The court held that Rule 31-C(b) did not require the filing of any return or payment of the tax, but it merely provided that if an applicant was a defaulter in furnishing any return or a revised return together with the receipted challan showing payment of the tax due from him according to such return or revised return, then the prescribed authority should withhold the issue to him of the forms mentioned therein until such time as he furnished the returns and filed the challans. This, by itself, was not an unreasonable restriction on the right to carry on the trade or business and, therefore, Rule 31-C(b) did not violate article 19(1)(g) of the Constitution. It was also held that by filing of the nil return, the requirement of Rule 31-C(b) was fulfilled and the officer was not entitled to reject the return as being incorrect. No investigation or enquiry in respect of the return filed by the petitioner was envisaged or authorised at the stage of the application for issue of forms and, therefore, that part of the order of the officer holding that until the petitioner paid the purchase tax his application for issue of forms could not be allowed, should be set aside.
26. The principle of that case will equally apply to the facts of the instant case.
27. There is one other aspect of the matter. Application for renewal of eligibility certificate is to be considered afresh every year. Merely because one particular year the application was rejected that would not be a ground for rejecting the certificate for the subsequent years. In the case of Dwarkesh Engineering Works v. Assistant Commissioner, Commercial Taxes, Calcutta (South) Circle reported in (1986) 19 STA 290 (Cal), it has been held by Mr. Justice Suhas Chandra Sen that the question whether a dealer is entitled to eligibility certificate has to be considered afresh every year. Whether the dealer fulfilled all the conditions has to be examined at the time of original grant of the certificate and also at the time of renewal of the certificate. The' dealer was refused a certificate in the first year on the ground that he had realised sales tax in respect of sales of the newly set-up industrial unit. That cannot make the dealer ineligible for a certificate for all time to come. The petitioner claimed that in the second year he has rectified this mistake and he has fulfilled all the conditions. It was held that if the dealer fulfils all the conditions contained in Rule 3(66), then the dealer will be entitled to get an eligibility certificate.
28. In this case the renewal of the eligibility certificate for one year has been refused. The revision petition is still pending. Accordingly even if the tax is due on the basis that eligibility certificate has been rejected for a particular year, it can only be the tax due for that year but not for all the years where applications for renewal are still pending before the authorities.
29. In my judgment when the question of renewal of the eligibility certificate has to be considered every year afresh, the declaration forms cannot be refused for the purchases made for the period during which the application for renewal of the eligibility certificate has been kept pending. Rejection of the application for renewal of the eligibility certificate for one year would not amount to the rejection of the renewal of the eligibility certificate for all the remaining years as the concerned authorities have to find out whether the conditions prescribed have been fulfilled by the dealer for each of the years or not. In my judgment the declaration forms cannot be refused solely on the ground that the application for eligibility certificate has been rejected by the Assistant Commissioner, Commercial Taxes, when the revision petition against such order is pending before the Commissioner, Commercial Taxes. The said sales tax authorities have not proceeded strictly in accordance with the mandate of Rule 27AA(2)(c). In this case in refusing the declaration forms the authorities concerned did not act fairly or reasonably or in accordance with the provisions of the said rule.
30. There is another aspect of the matter in the affidavit filed before Mr. Justice S. C. Sen which has been reproduced earlier. It has been stated that the entire sales of Rs. 32,50,000 would be taxable at 8 per cent unless the petitioner has secured declaration forms in support thereof in the meantime. In the event the said sales are not supported by declaration, the tax that would be due and payable by the petitioner would amount to Rs. 2,60,000 approximately which the petitioner should pay in order to obtain declaration form. In my view this is not correct approach at all.
31. Pursuant to the direction of this Court the petitioner paid a sum of Rs. 32,500 and the sales tax authorities issued declaration forms covering the purchases to the extent of Rs. 15 lakhs. The said declaration forms covered the purchases made up to the period 1982-83. The said declaration forms were issued on the basis that the petitioner was liable to pay sales tax at 2 per cent. The petitioner being a registered dealer is liable to pay tax at 1 per cent against his sales. The sales are to the registered dealers. It is not the case that the sales are made by the petitioner to the unregistered dealers. The petitioner has purchased from purchasing dealers to whom the declaration forms are to be issued. If the petitioner fails to give them the declaration forms their sales to the petitioner would be treated as unregistered sales and they have to pay tax on this. The petitioner is not therefore liable to pay tax at the rate of 8 per cent unless his sales are to the unregistered dealer. Therefore the commensurate value of Rs. 32,500 should be Rs. 32,50,000 and accordingly the respondents should have issued declaration forms covering purchases of Rs. 32,50,000 instead of Rs. 15 lakhs.
32. For the reasons aforesaid, this application is allowed. The orders of the respondents rejecting the application for declaration forms are set aside. The sales tax authorities are directed to issue the declaration forms to the petitioner for the periods 1984-85, 1985-86 and 1986-87. The petitioner will be at liberty to make application for declaration forms for the subsequent periods and the sales tax authorities shall dispose of the said application in the light of the observations made in this judgment. Let the declaration forms in respect of the aforesaid periods be issued to the petitioner within two weeks from date so that the petitioner can furnish the declaration forms to the purchasing dealers of the petitioner.
33. The respondent-authorities are directed to dispose of the revision application filed and pending before the Additional Commissioner, Commercial Taxes, against the order of the Assistant Commissioner of Commercial Taxes rejecting the application for renewal of the eligibility certificate within four weeks from the date of communication of this order. So long as the revision application is not disposed of, the respondents are directed not to make any assessment for the periods involved in the pending application for the renewal of the eligibility certificate.
34. The sum of Rs. 10,000 which was directed to be deposited by the petitioner, shall be deposited by the petitioner with the Commercial Tax Officer who shall adjust the sums if upon the assessment being made, any demand is raised.
35. All parties shall act on the signed copy of the operative part of this judgment and order on the undertaking of the Advocate on record for the petitioner to apply for and obtain a certified copy of the judgment and order made herein.