Declared goods taxation: last-sale liability, estoppel on returned sales, and reassessment upheld on suppression findings.

For declared goods, the taxable stage under the Gujarat Sales Tax Act was the last sale or purchase within the State, so a licensed dealer selling to an unlicensed purchaser remained the last dealer liable to tax; section 9(4) did not defeat that liability merely because the goods were later dealt with by another licensed dealer. The dealer was also estopped from disputing the genuineness of sales already shown in its returns and from later describing them as accommodation transactions. On the facts found, suppression of material particulars justified reassessment, extended limitation and disallowance of deductions, and the Revenue's stand was upheld on all referred questions.

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Issues: (i) Whether a licensed dealer who sells declared goods to an unlicensed dealer can be treated as the last dealer liable to tax, and whether section 9(4) of the Gujarat Sales Tax Act, 1969, bars tax when the same goods are later dealt with by another licensed dealer; (ii) whether the dealer was estopped from denying the genuineness of the sales shown in its returns and from characterising them as accommodation transactions; (iii) whether, on the facts found, the reassessment, extended limitation and disallowance of deductions were justified.

Issue (i): Whether a licensed dealer who sells declared goods to an unlicensed dealer can be treated as the last dealer liable to tax, and whether section 9(4) of the Gujarat Sales Tax Act, 1969, bars tax when the same goods are later dealt with by another licensed dealer?

Analysis: The scheme of section 9 of the Gujarat Sales Tax Act, 1969, makes the last sale or purchase inside the State the taxable stage for declared goods. Once the assessee sold the goods to unlicensed dealers, the taxable stage was reached and the liability to tax had arisen. The contention that a later licensed purchaser could become a "second last dealer" was rejected as unsupported by the statutory scheme. Section 9(4) was held to operate only against a further levy at a subsequent stage after tax had already become leviable at the earlier stage.

Conclusion: The assessee was the last dealer for the relevant sales and section 9(4) did not protect it from tax. The finding was against the assessee and in favour of the Revenue.

Issue (ii): Whether the dealer was estopped from denying the genuineness of the sales shown in its returns and from characterising them as accommodation transactions?

Analysis: The sales were reflected in the dealer's returns and were acted upon in the assessment proceedings. On that factual foundation, the dealer could not later take a contrary stand and deny the very transactions or re-describe them as havala or accommodation sales. The Tribunal's conclusion rested on the inconsistency between the returned transactions and the subsequent challenge to their genuineness.

Conclusion: The dealer was estopped from denying the sales as entered in its returns. The finding was against the assessee and in favour of the Revenue.

Issue (iii): Whether, on the facts found, the reassessment, extended limitation and disallowance of deductions were justified?

Analysis: The authorities found suppression of material particulars relating to the sales and held that the limitation provision for reassessment was therefore attracted. Since the sales were treated as real and taxable, the deductions claimed in respect of those transactions were not admissible. The same reasoning applied to the connected Gujarat Act assessment, where the deductions were disallowed and the assessee was held liable on the relevant sales.

Conclusion: The reassessment, extended limitation and disallowance of deductions were upheld. The findings were against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered wholly in favour of the Revenue, and all referred questions were answered against the assessee.

Ratio Decidendi: For declared goods, the taxable stage under the Gujarat sales tax scheme is the last sale or purchase in the State, and a dealer who makes that sale to an unlicensed purchaser cannot avoid liability by invoking a later transaction or by denying the sales earlier shown in its returns.

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