Registration-based tax liability may arise for a wrongly registered person even where estoppel and business character are rejected.

Under tax law, estoppel cannot enlarge liability, so obtaining registration and issuing form C declarations did not prevent the assessee from denying dealer status. The assessee was therefore not estopped. The isolated sale of printing machinery was not a transaction in the course of business, because the assessee was engaged in job-work printing as a service activity and the sale was not shown to be part of a trading pattern or an adventure in the nature of trade. The assessee was therefore not a dealer on that basis. Section 29(6) operated as a special charging provision for a person wrongly registered on his own application, and liability attached to sales made while the registration remained effective. The assessee was liable to tax under that provision.

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Issues: (i) Whether the assessee was estopped from denying that it was a dealer because it had obtained registration and furnished declarations in form C; (ii) Whether the sale of printing machinery was a transaction in the course of business so as to make the assessee a dealer; (iii) Whether section 29(6) of the Gujarat Sales Tax Act, 1969 created liability to tax on the sale of machinery during the currency of the registration certificate even though the assessee was not otherwise liable as a dealer.

Issue (i): Whether the assessee was estopped from denying that it was a dealer because it had obtained registration and furnished declarations in form C.

Analysis: Liability under a taxing statute cannot be enlarged or restricted by estoppel. The character of the transaction must be determined by the statute, and the fact that the assessee had obtained registration or had acted on the footing of registration did not prevent it from contending that its activity was merely service and not business. The doctrine of approbate and reprobate has no place where tax liability is to be determined strictly according to law.

Conclusion: The assessee was not estopped from denying dealer status.

Issue (ii): Whether the sale of printing machinery was a transaction in the course of business so as to make the assessee a dealer.

Analysis: Under section 2(4), business includes commercial activity and transactions ancillary or incidental to trade, commerce, manufacture or adventure in the nature of trade, but excludes activity in the nature of mere service. On the facts found, the assessee was engaged in job-work printing for the newspaper owners and was rendering service rather than carrying on business. The isolated sale of one item of machinery, not shown to be part of a trading pattern and not resembling an adventure in the nature of trade, could not be treated as business. The sale was also not brought within the definition through the ancillary-or-incidental limb, because that limb presupposes an underlying business activity.

Conclusion: The assessee was not a dealer in respect of the sale of machinery on the footing of business.

Issue (iii): Whether section 29(6) of the Gujarat Sales Tax Act, 1969 created liability to tax on the sale of machinery during the currency of the registration certificate even though the assessee was not otherwise liable as a dealer.

Analysis: Section 29(6) was construed as a special charging provision intended to cover a person who, on his own application, has been registered as a dealer but is later found not to have been entitled to registration because he is not a dealer or is not liable to tax. The provision, read with its non obstante clause, creates liability for sales or purchases made between the effective date of registration and its cancellation, notwithstanding that no liability would arise under the Act otherwise. Since the assessee had been registered on its own application and ought not to have been so registered, the statutory conditions were satisfied.

Conclusion: The assessee was liable to tax under section 29(6) on the sale of machinery.

Final Conclusion: The reference was answered by rejecting the estoppel contention and the business-based taxability of the machinery sale, but by upholding liability under the special registration-based charging provision.

Ratio Decidendi: In tax law, estoppel cannot create or defeat chargeability, but a registration-based charging provision may impose tax on a person who was wrongly registered on his own application for transactions made while the registration remained effective.

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