1953 (1) TMI 13 - HC - VAT and Sales Tax

High Court: Failure to Register under Sales Tax Act justified penalty imposition

The High Court held that the petitioner, who operated a private bonded warehouse for non-duty paid tobacco, qualified as a 'dealer' under the Bihar Sales ... - Issues Involved:1. Whether the applicant is a dealer within the meaning of the Bihar Sales Tax Act VI of 1944 and is liable to be taxed as such.2. Whether the application for reference to the High Court was filed within the prescribed time limit.Issue-wise Detailed Analysis:1. Whether the applicant is a dealer within the meaning of the Bihar Sales Tax Act VI of 1944 and is liable to be taxed as such:The core issue revolves around whether the assessee qualifies as a 'dealer' under the Bihar Sales Tax Act VI of 1944. The assessee argued that he merely operated a private bonded warehouse for non-duty paid tobacco under the Central Excise Law, and did not engage in purchasing or selling tobacco. Instead, he facilitated the storage and transportation of tobacco for others who purchased it in Nepal and stored it in his warehouse. The petitioner contended that the tobacco did not belong to him and thus, he should not be characterized as an arhatdar, commission agent, or supplier of tobacco.However, it was established that the petitioner possessed licenses under the Central Excise Department in forms L-2 and L-5, which are for wholesale trade in tobacco and for operating a private bonded warehouse, respectively. Rule 172 of the Central Excise Manual specifies that a private warehouse should contain only goods belonging to the warehouse owner and on which duty has not been paid. The petitioner's operation was found to be possible only because he was a wholesale dealer holding a license in form L-2. The Central Excise and Salt Act, 1944, defines a 'wholesale dealer' as someone who buys or sells excisable goods wholesale for trade or manufacture, including brokers or commission agents who stock such goods for others for sale.Under the Sales Tax Act, a 'dealer' is defined as any person who carries on the business of selling or supplying goods in Bihar, whether for commission, remuneration, or otherwise. Given that the petitioner held a wholesale dealer's license, he was deemed to be a dealer under the Sales Tax Act. Consequently, it was his duty to register under the Sales Tax Act. The failure to do so justified the imposition of the penalty.2. Whether the application for reference to the High Court was filed within the prescribed time limit:The preliminary objection raised by the State was that the petitioner applied to the Board of Revenue for making a reference to the High Court more than sixty days after the revision application was dismissed by the Board of Revenue. According to Sections 21(1) and 21(2) of the Bihar Sales Tax Act of 1944, an application for reference to the High Court must be made within sixty days from the passing of the order by the Board of Revenue. If the Board refuses to make a reference, the applicant may apply to the High Court within thirty days of such refusal.The assessee argued that the case was governed by the Bihar Act XIX of 1947, which allowed ninety days for such applications. However, the court held that the assessment period in question was from 1st July, 1946, to 31st March, 1947, and the Act of 1947, which came into force on 1st June, 1947, did not affect liabilities incurred before its commencement. Thus, Section 21 of the Act of 1944 applied, and the application was required to be made within sixty days. The court referenced previous decisions, including Doma Sao Kishun Lal v. State of Bihar and Hukmi Chand v. Commissioner of Income-tax, which supported the principle that applications made beyond the prescribed period of limitation were invalid.The court concluded that the Board of Revenue was justified in refusing to make a reference, and the High Court should not have called for a statement of the case under Section 21(3). The preliminary objection succeeded, and the application was dismissed with costs.Conclusion:The High Court did not express its opinion on the question of law referred due to the preliminary objection regarding the time limit. The assessee was required to pay the cost of the reference, assessed at Rs. 200. The reference was not answered.