TaxTMI 
TaxTMI 
1993 (2) TMI 281
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....and in the circumstances of the case, the conclusion of the Tribunal that there was no reasonable cause within the meaning of section 45(6) of the Act was perverse and whether the Tribunal erred in holding that penalty was not required to be remitted either in whole or in part under the proviso to the said section?" 2.. These questions arise from the following unusual facts: (i) The applicant, Messrs. Marshal Distributors of Baroda, is registered as a dealer under the Act, reselling the products manufactured by M/s. Suhrid Geigy Ltd. The applicant purchases dyes and chemicals from M/s. Suhrid Geigy Ltd. under regular sale bills issued by the vendor. During the period of assessment between July 1, 1978 and September 30, 1978, the applicant purchased such goods of the total value of Rs. 91,51,487 from the said vendor by issuing declarations in form 17A. The applicant had declared that the goods purchased by it will be resold by it in the course of inter-State trade and commerce. On account of issue of such declarations the vendor could not charge any tax from the applicant on the said sales of Rs. 91,51,487. For the assessment of this period the Sales Tax Officer issued a notic....
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.... passed an order of assessment levying purchase tax of Rs. 2,41,797.08 under section 16 of the Act upon purchase of Rs. 60,44,927 in respect of which the applicant had committed the breach of the declarations. He added a sum of Rs. 14,507.82 as surcharge at 6 per cent and imposed penalty of Rs. 55,015.48 under section 45(6) of the Act. Credit was given for the amount of Rs. 44,706 paid by the applicant and a demand of Rs. 2,66,614.38 was raised against the applicant. The Assistant Commissioner observed in his assessment order that when notice of assessment was issued in form No. 36 and when the applicant was called on January 16, 1979, and when the scrutiny of the account books was being made, the applicant realised that it had transferred some of its goods to its branches and it would be liable to pay purchase tax under section 16 of the Act. As the Assistant Commissioner found that the difference between the purchase tax and the tax paid by the applicant along with the returns would exceed 20 per cent the penalty of Rs. 55,015.48 was leviable under section 45(6) of the Act. He further observed that even though the vendor had recovered sales tax from the applicant and paid the sam....
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....rnover would result in double taxation, the Tribunal observed that strict interpretation of section 16 of the Act would not result in double taxation. The Tribunal, therefore, rejected the revision application. (iv) Now at the instance of the applicant-dealer the aforesaid questions have been referred to this Court by the Tribunal. 3.. The following facts have to be kept in mind while considering and answering the questions (i) The declarations in form No. 17A were withdrawn and replaced by other forms in respect of goods worth Rs. 60,44,927 before the assessment orders were passed against the applicant-dealer, and the vendor. (ii) The vendor paid sales tax in respect of the turnover in question by recovering it from the applicant, along with interest charged under section 47(4A) of the Act at the rate of 24 per cent per annum for late payment of the tax. (iii) As stated by Mr. Modi for the applicant, at the Bar, the vendor M/s. Suhrid Geigy and Co. challenged his assessment by filing an appeal which is still pending. (iv) By the, order of Assistant Commissioner of Sales Tax the applicant is required to pay purchase tax and penalty at the rate of 24 per cent per a....
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....d., we called upon Mr. Modi to produce the authentic consent recorded by Suhrid Geigy Ltd. Suhrid Geigy Ltd. has now appeared through Mr. J.S. Joshi, Advocate, who states that M/s. Suhrid Geigy Ltd. would have no objection if adjustment is granted as suggested by Mr. Modi on behalf of the applicant-dealer. 6.. In order to appreciate the submissions of Mr. Modi regarding the applicability of section 16 of the Act, we will have to refer to the aforesaid provision along with section 13 of the Act. The relevant provision which is applicable in the present case is section 16(1) of the Act which reads as under: "16. Liability to purchase tax for contravention of terms of certificates, etc.-(1) Where any dealer or commission agent has purchased any taxable goods under a certificate given by him under section 12 or 13, and (a) contrary to such certificate, the goods are used for another purpose, or are not resold or despatched in the manner and within the period certified, or (b) on the resales in the course of inter-State trade or commerce, of the goods so purchased, no tax under the Central Sales Tax Act, 1956 (LXXIV of 1956) is actually payable by him on account of any deduc....
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....der section 16(1) of the Act. This finding will have the repercussions on the issues involved in all the three questions and in view of the suggestions made by Mr. Modi on behalf of the applicant which is approved and accepted by the vendor, Suhrid Geigy Ltd., the questions will have to be re-framed as under: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the applicant was liable to pay purchase tax under section 16(1) of the Act, even though it had withdrawn the declarations in form 17A after the assessment proceedings started and before they were concluded? (2) If answer to the above question is in negative, whether adjustment should be given to the amount of sales tax paid by the vendor, Suhrid Geigy Ltd., in respect of the same turnover in order to avoid the vice of double taxation? (3) If answer to the above question No. (2) is in the affirmative, whether the applicant was liable to pay penalty under section 45(6) of the Act? If the answer to the question No. (2) is in the negative, whether the Tribunal erred in holding that penalty was not required to be remitted either in whole or in part, under the proviso....