1977 (11) TMI 131 - HC - VAT and Sales Tax

Court Upholds Set-Off for Purchase Tax Despite Form Deviation

The court found that the respondents, registered dealers under the Bombay Sales Tax Act, were entitled to a set-off for purchase tax paid on materials ... - Issues Involved:1. Entitlement to set-off under rule 11(1A) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954.2. Compliance with the requirement of furnishing a statement in form (12) under rule 11(4) of the said Rules.3. Interpretation of mandatory versus directory nature of rule 11(4).4. Relevance of previous judgments and authorities on the issue of compliance with statutory requirements for set-off.Issue-wise Detailed Analysis:1. Entitlement to Set-off under Rule 11(1A):The respondents, registered as dealers under the Bombay Sales Tax Act, 1953, claimed a set-off for the purchase tax paid on materials bought from unregistered dealers, used for manufacturing paper or packing goods. The Sales Tax Tribunal allowed this claim, although the sales tax authorities had initially rejected it due to non-compliance with the requirement of submitting details in form (12).2. Compliance with Requirement of Furnishing a Statement in Form (12):The core issue was whether the respondents were entitled to a set-off when they had not furnished the statement in form (12) as required by rule 11(4). The Tribunal found that although the details were not submitted in form (12), they were included in the returns. The Tribunal ruled this as sufficient compliance, despite the department's contention that the provisions were mandatory and any non-compliance would disqualify the dealer from receiving a set-off.3. Interpretation of Mandatory Versus Directory Nature of Rule 11(4):The court assumed rule 11(4) to be mandatory but still found that the respondents fulfilled all conditions and requirements of the rule, except for the submission in form (12). The court emphasized that minor deviations from the prescribed form, such as submitting required details within the body of the returns instead of a separate form, did not constitute non-compliance. The court rejected the department's hypertechnical stance, stating that such trivial non-compliance should not deprive the respondents of their entitlement to set-off.4. Relevance of Previous Judgments and Authorities:The court distinguished the present case from previous authorities cited by the department. In *Collector of Sales Tax, Bombay State v. Jamnadas Dharumal*, the issue was about an unregistered dealer claiming set-off, which was fundamentally different from the present case where the respondents were registered dealers. The court also distinguished the Supreme Court's decision in *Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer*, noting that the context of preventing fraud and ensuring administrative efficiency did not apply here. The court instead relied on *Commissioner of Sales Tax, Maharashtra State, Bombay-10 v. Hindustan Silk Mills, Bombay-2*, where a similar hypertechnical contention was rejected.Conclusion:The court concluded that the respondents had sufficiently complied with the requirements of rule 11(4) by providing all necessary details, albeit not in the exact prescribed form. The court answered both questions in the affirmative, affirming the Tribunal's decision. The court also noted the destruction of relevant evidence by the department and the lack of request for forwarding the returns or copies thereof by the applicant, which further supported the respondents' case. Consequently, the court ordered the applicant to pay the respondents an aggregate sum of Rs. 300 by way of costs.