1969 (1) TMI 60 - HC - VAT and Sales Tax

Dealer's Liability under Sales Tax Act despite Certificate Form Defects

The Court held that a dealer can be liable under section 4(6) of the Madhya Pradesh General Sales Tax Act, even if the registration certificate does not ... - Issues:Interpretation of liability under section 4(6) of the Madhya Pradesh General Sales Tax Act, 1958 based on the dealer's registration certificate.Detailed Analysis:1. Background: The case involved a reference under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, regarding the liability of the assessee, a registered dealer, under section 4(6) of the Act. The issue was whether the liability to be assessed under section 4(6) arises only if the registration certificate of the dealer strictly conforms to the prescribed form.2. Facts and Contentions: The assessee, engaged in the business of purchasing stick lac, faced a dispute when the Sales Tax Authorities sought to levy purchase tax under section 4(6) of the Act. The contention was that as the goods purchased were not specified in the registration certificate for use as raw materials in the manufacture of goods for sale in Madhya Pradesh, no purchase tax could be imposed. However, this objection was overruled at various levels of appeal.3. Court's Analysis: The Court emphasized that the absence of goods' specification in the registration certificate does not absolve the assessee from liability if all conditions for imposing purchase tax under section 4(6) are met. Citing the Supreme Court's decision in Modi Spinning and Weaving Mills Co. Ltd. v. Commissioner of Sales Tax, Punjab, the Court highlighted that any defect in the registration certificate is not material.4. Precedent and Conclusion: Referring to the Supreme Court's decision in Mohanlal Hargovind Das v. State of M.P., the Court reiterated that the certificate of registration must be construed in light of the amended provisions of the Act. The Court concluded that even if the registration certificate does not strictly conform to the prescribed form under section 4(6), the dealer can still be liable under the amended section if there is evidence of purchasing goods tax-free for a specific purpose and then utilizing them differently.5. Decision and Cost: Following the precedent set by the Supreme Court, the Court answered the reference by affirming that the dealer can be assessed under section 4(6) despite the registration certificate's lack of strict conformity. The assessee was directed to pay the costs of the reference, with fixed counsel fees.This detailed analysis of the judgment from the Madhya Pradesh High Court provides a comprehensive understanding of the legal principles applied in determining the liability of a dealer under section 4(6) of the Sales Tax Act based on the specifications in the registration certificate.