1987 (3) TMI 495 - HC - VAT and Sales Tax

Court quashes order, directs declaration forms issuance. Sales tax liability left for tax authorities. Each party bears own costs.

Ram Lawat Shaw Versus Commercial Tax Officer

The Court allowed the appeal, quashed the Officer's order, and directed the Officer to issue the declaration forms if the application complied with the ... - Issues:1. Interpretation of rule 27AA of the Bengal Sales Tax Rules, 1941.2. Authority of Commercial Tax Officer to withhold declaration forms.3. Bona fide use of declaration forms by the appellant.4. Jurisdiction of the court to interfere with discretionary powers of the Commercial Tax Officer.Interpretation of Rule 27AA:The appellant, a registered dealer, applied for declaration forms under rule 27AA of the Bengal Sales Tax Rules, 1941. The Commercial Tax Officer withheld the forms citing non-payment of full tax on sales and incorrect returns. The appellant argued that the Officer could only reject the application under rule 27AA(2)(a)(i) and not withhold forms under (2)(c). The Court agreed, emphasizing that the Officer's power to withhold forms was limited to cases of default in furnishing returns with payment details.Authority to Withhold Declaration Forms:The Court found that the Officer's decision to withhold forms was not in accordance with the statute. The Officer could only withhold forms if the dealer defaulted in furnishing returns with payment details. Since there was no default in this case, the Officer exceeded his authority by withholding the forms, which should have led to rejection of the application.Bona Fide Use of Declaration Forms:The appellant contended that he used the declaration forms in good faith for purchasing commodities, which he later resold. The Court agreed, stating that there was no evidence of mala fide use of the forms. The appellant's argument that he was not required to pay sales tax on certain sales was acknowledged, although the Court did not make a final determination on this issue.Jurisdiction of the Court:The Court held that the Officer's demand for the appellant to rectify returns and pay additional tax before assessment was not supported by the law. Such actions should only occur during assessment proceedings, not at the form issuance stage. The Court set aside the Officer's order, allowing the appellant's application for declaration forms and directing the Officer to act in accordance with the law.In conclusion, the Court allowed the appeal, quashed the Officer's order, and directed the Officer to issue the declaration forms if the application complied with the law. The Court clarified that the question of the appellant's liability for sales tax on certain sales was left for the tax authorities to assess. Each party was ordered to bear its own costs.