TaxTMI 
TaxTMI 
1975 (3) TMI 121
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....n the two writ petitions, out of which the two Letters Patent appeals have arisen, and in all the other nine writ petitions (hereinafter referred to as the "petitioners"), are all dealers registered as such under the Bengal Finance (Sales Tax) Act, 1941, as in force in the Union Territory of Delhi (hereinafter referred to as the "Sales Tax Act"). The challenge in the various writ petitions is against assessment orders passed against the respective parties in different years by the concerned Sales Tax Officers, and against a Notification No. F. 4(33)/64-Fin. (E) dated 30th June, 1965, issued by the Under Secretary, Finance (Expenditure), Delhi Administration, Delhi. The various petitioners, as registered dealers, have been issued registration certificates as provided in the Act. They have been dealing, inter alia, in disposal of goods, viz., old motor vehicles and old motor parts. They have been purchasing old motor vehicles which belong to and have been condemned by the Defence Ministry in public auction conducted by Government auctioneers under instructions from the Director-General, Supplies and Disposals, New Delhi. After purchase, the petitioners have been dismantling the ol....
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....his turnover during that period on- (i) the sale of goods declared tax-free under section 6; (ii) sales to a registered dealerof goods of the class or classes specified in the certificate of registration of such dealer, as being intended for resale by him, or/and for use by him as raw materials in the manufacture in the Union Territory of Delhi (hereinafter in this sub-clause referred to as Delhi), of goods (other than goods declared tax-free under section 6)- (a) (A) for sale inside Delhi; or (b)................................. (c)................................. Provided that in the case of such sales a declaration duly filled up and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars on a prescribed form obtainable from the prescribed authority is furnished in the prescribed manner by the dealer who sells the goods; Provided............" Section 5A confers power on the Chief Commissioner to prescribe points at which goods may be taxed. It provides that: "Notwithstanding anything to the contrary in this Act, the Chief Commissioner may, by notification in the official Gazette, specify the point in....
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....ing of rules by the Chief Commissioner for carrying out the purposes of the Act. In exercise of the power conferred by section 26 of the Sales Tax Act, the Chief Commissioner made "the Delhi Sales Tax Rules, 1951" (hereinafter referred to as the "Rules"). The rules relevant for the purposes of the present cases are rules 3, 4, 5 and 6 of the Rules. We shall refer to them in the proper context. As already stated, the petitioners in the various writ petitions including the writ petitions out of which the two Letters Patent appeals have arisen, are all dealers registered as such under the Sales Tax Act, and they were issued registration certificates as provided in section 7 of the Sales Tax Act. Rule 5 of the Rules prescribed that the certificate of registration should be in form S. T. III or S. T. IV according as the dealer has one or more than one place of business in the State of Delhi. Rule 6 provided that the registration certificate shall specify, inter alia, the class or classes of goods, which may be sold to the dealer free of tax as being required either- (i) for resale, or (ii) for use as raw materials in the manufacture in the Union Territory of Delhi of ....
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....n vehicles which has not suffered any tax under the said Act shall be liable to tax as if the dealer was a manufacturer or importer in terms of this notification." According to the aforesaid notification, with effect from 1st July, 1965, the turnover in respect of sales of motor tyres and tubes is liable to tax only at any of the points mentioned in the notification. The points mentioned in the main part of the notification are (a) sales by importer if imported from outside the Union Territory of Delhi and (b) sales by manufacturer, if manufactured in the Union Territory of Delhi. The petitioners do not fall in either of the aforesaid categories and, therefore, they are not liable to be charged or entitled to charge sales tax on sales of the separated motor tyres and tubes effected by them under the main part of the notification. However, the proviso in the notification made them liable to tax in respect of their sales of the separated motor tyres and tubes which had not suffered any tax under the Sales Tax Act as if the petitioners are manufacturers or importers within the meaning of the main part of the notification. It has to be noted that the proviso merely referred to sales....
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.... of the selling registered dealer (i. e., B) in respect of such sales would be liable to tax because he (i.e., B) is to be treated as importer or manufacturer under the proviso to the notification, and he would be liable to pay the tax collected by him from A to the sales tax authorities. But, when the aforesaid registered dealer (i. e., A) who purchased from the registered dealer (i. e., B) resells subsequently the same tyres and tubes to another registered dealer or unregistered dealer or consumer, such a sale would not be liable to tax, as the tyres and tubes had already suffered tax under the Sales Tax Act in the aforesaid previous sale transaction between B and A. Similar would be the position in further subsequent sales of the same tubes and tyres to another registered dealer or unregistered dealer or consumer. It appears that, after the issue of the notification, the sales tax authorities visited the shops of the petitioners and all other registered dealers, estimated the cost of the stock of the motor tyres and tubes which were lying with them on 30th June, 1965, and collected sales tax from the petitioners on the estimated price of the said tyres and tubes. It is, however,....
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....to section 4 and destroys the liability qua all points except those mentioned in the notification under section 5A. (2) If held otherwise, the proviso would be hit by the doctrine of discrimination between registered dealers and unregistered dealers, and (3) In any case the petitioners are not covered by the proviso to the notification, as they ceased to be registered dealers on the deletion of the items from their registration certificates, and the proviso mentions only sales by registered dealers. The first two contentions mentioned above were argued by Mr. A.K. Sen and Mr. Manchanda also. All the three aforesaid contentions were urged before the learned single Judge, but were not accepted. The first contention is as regards the scope and effect of the proviso to the notification. We have already set out the notification earlier in this judgment. There is nothing in the proviso to the notification to suggest that it is to apply only to the sales of the stock of tyres and tubes which existed with the petitioners, registered dealers, as on 30th June, 1965, and is not intended to operate prospectively and apply to sales of tyres and tubes purchased subsequent to that dat....
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....eventually made either to an unregistered dealer or a consumer, the tax was payable, and the same was to be collected by the last registered selling dealer from the purchasing unregistered dealer or consumer and passed on to the sales tax authorities. In other words, the tax was leviable at the point of the last sale in the series. Section 5A empowers the Chief Commissioner to specify the point in the series of sales by successive dealers at which any goods or class of goods may be taxed. The said provision was added by the Bengal Finance (Sales Tax) (Delhi Amendment) Act (No. 20 of 1959), and the object of the amendment was stated in the objects and reasons for the amendment to be: "to provide for the levy of tax at any point other than the point of last sale so that sales tax may be levied at the first point on certain items which are manufactured in factories." It was in exercise of that power under section 5A that the impugned notification was issued making tyres and tubes liable to tax only at the point of (a) sale by importer if imported from outside the Union Territory of Delhi, or (b) sale by manufacturer if manufactured in the said territory. Thus, the purpose of ....
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....is only as regards such a registered or unregistered dealer. Now, in the case of a registered dealer whose gross turnover exceeds the taxable quantum in any year, as pointed out earlier and it cannot be and is not disputed, his turnover on sales of tyres and tubes which had not suffered any tax under the Sales Tax Act is liable to tax under the proviso to the notification as if he is an importer or manufacturer in terms of the notification. Even where the aforesaid registered dealer, instead of purchasing vehicles from the Defence Ministry and separating the tyres and tubes, purchases tyres and tubes from another registered dealer, unless the said goods had already suffered any tax under the Sales Tax Act, he would be liable to pay sales tax to his seller as the goods were deleted from his certificate of registration, and the turnover of the said seller in respect of such sales would be liable to tax because, being a registered dealer, he is deemed to be an importer or manufacturer under the proviso to the notification. When the said purchasing registered dealer resells subsequently the same tyres and tubes to another registered dealer or unregistered dealer or consumer, such a ....
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....earned counsel submitted that the provision in section 5A is an exception to the provision in section 4(2) and destroys the liability to tax qua all points except the point mentioned in the notification under section 5A, and that, in the present case, the words "only at the point of" used in the notification make it quite clear that the turnover in respect of tyres and tubes is liable to tax only at the point of sale by an importer or by a manufacturer and is not liable to tax at the point of any subsequent sale. In answer to the said contentions, the learned Solicitor-General contended that it is not correct to say that section 5A destroys the liability to tax at all points other than the point mentioned in a notification under that section, and that, in the present case, the notification issued under section 5A fixes the point only with respect to the three classes or categories of dealers, viz., importer, manufacturer and registered dealer, and not with respect to others like unregistered dealers. According to him, the turnover of sales of tyres and tubes by unregistered dealers would, therefore, be liable to tax. Alternatively, he contended that even if it is held that the sale....
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....x Act. The two are, therefore, dealt with differently. The registered dealer is enabled to collect tax and pay to the authorities, while the unregistered dealer is prohibited from carrying on the business of selling goods and collecting tax; and if he surreptitiously carries on business he is subjected to penalty. The learned counsel for the petitioners sought to point out that a dealer whose turnover exceeds the taxable quantum acts in accordance with law and gets himself registered is made liable to pay tax under the proviso to the notification, while a dealer who does not act in accordance with law and get himself registered even though his turnover exceeds the taxable quantum, is not made liable to pay tax in respect of the sales of tyres and tubes. As pointed out already, the registered dealer, who is made liable to pay tax on the turnover of his sales of tyres and tubes which had not already suffered tax under the Act, can realise the same from the person who purchases from him and is not, therefore, a loser. On the other hand, an unregistered dealer, whose turnover exceeds the taxable quantum cannot sell tyres and tubes at all, and even if he sells them surreptitiously, he c....
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....ler having only one place of business in the State of Delhi, and in form S.T. II if made by a dealer having more than one place of business in the State. The relevant columns in the said two forms are practically the same. They are columns 2 and 11 in form S.T. I, and columns 2 and 10 in form S.T. II. It is sufficient to set out columns 2 and 11 in form S.T. I. They are as follows: "2. The business is- Wholly mainly partly partly partly. 11.. The following classes of goods are ordinarily purchased by the business: (a) for purposes of manufacture in the Union Territory of Delhi of goods (other than goods declared tax-free under section 6) for sale in the manner specified in section 5(2)(a)(ii) of the Act, (b) for resale, (c) for containers or other packing materials." It has to be noted that the dealer has to state in column 2 the goods in respect of which he desires to carry on the business of selling, and that in column 11 he has to mention the class or classes of goods in respect of which he desires to get the advantage of purchasing the same free of tax or claiming a deduction from his gross turnover according as he is a purchaser or a seller as provided in ....
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.... propositions emerge from the various provisions in the sections, rules and forms set out above: (1) A dealer, whether registered or unregistered, is liable to pay tax if his gross turnover exceeds the taxable quantum [vide section 4(2)]. The liability to pay tax is thus in no manner connected with registration. The necessity for registration arises by reason of the prohibition in section 7(1), viz., that no dealer who is liable to pay tax under section 4 shall carry on the business of selling goods unless he has been registered and possesses a registration certificate. It is thus clear that the liability to pay tax under the Act is independent of registration. (2) On registration, a dealer gets certain benefits and advantages, which it is not necessary to enumerate here, while an unregistered dealer does not so get. When a dealer applies for registration, the application has to specify firstly, the items of goods in respect of which he proposes to carry on the business of selling, and secondly, he has to specify the class or classes of goods for the purposes of section 5(2)(a)(ii). The registration certificate also, when granted, has to specify the said two sets of items in ....
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....tled to sell tyres and tubes by virtue of the entry in column 2, but only they cannot purchase tyres and tubes free of tax, nor can another registered dealer who purchases from them can insist upon non-payment of tax on the goods purchased by him. A registration certificate can be amended or cancelled. Mere amendment does not amount to cancellation of the entire certificate. The deletion of "tyre and tube" from column 3 in the certificates of the petitioners was in the nature of a mere amendment of the certificates and not a cancellation thereof. It is thus clear that the said deletion did not amount to cancellation of the registration of the petitioners or their registration certificates. The registrations continued to subsist and the petitioners continued to be registered dealers carrying on the business of selling "retail old motor parts" (which would include tyres and tubes) mentioned in column 2 of their certificates for the purposes of the Act. The arguments that the petitioners ceased to be registered dealers qua the items deleted from column 3 is also not correct. The items specified in column 2 indicate the goods in respect of which the registered dealer carries on the ....
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....tion is of a person who carries on the business of selling goods in Delhi with reference to his place or places of business, whose total sales in Delhi make him liable to tax under section 4 (vide section 7) or whose gross turnover of sales in Delhi exceeds Rs. 10,000 (vide section 8). Registration certificate must contain (1) the goods or classes of goods in which he deals and (2) the place or places of business. 2.. Registrability is thus dependent on the volume of dealer's sales, but only the volume of sales in Delhi is relevant and the sales outside are wholly irrelevant. 3.. A dealer is a registered dealer only in respect of articles and places of business entered in his certificate. Beyond those articles and places he is an unregistered dealer: Commissioner of Sales Tax v. Minerva Minerals(1). It, therefore, follows that he is a registered dealer qua sales in Delhi only. "A perusal of the reasoning in the judgment clearly shows that it was all in relation to the interpretation of the provision in the second proviso to section 5(2)(a)(ii). The statement in the third proposition extracted above that a dealer is an unregistered dealer in respect of places and art....
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...., J., observed at page 69 that: "It is plain on an examination of the relevant sections (of the C. P. and Berar Sales Tax Act 21 of 1947) and the statutory Rules that the certificate of registration is granted with reference to the place of business or places of business of the dealer and not with reference to the whole area of the State though for the purpose of determining the liability of the dealer, his turnover in respect of all places of business in the State including those not mentioned in the registration certificate is to be taken into consideration. It follows, therefore, that if a registered dealer carries on business in places not disclosed in the registration certificate he will have to be treated as an unregistered dealer vis-a-vis those places." It has to be noted that the said observations were made with reference to the place of business mentioned in the registration certificate and not with reference to goods specified in column 3 of the registration certificate. In the cases before us, the goods mentioned in column 3 of the registration certificates of the petitioners were specified for the purpose of enabling the petitioners to purchase free of tax the said ....