TaxTMI 
TaxTMI 
2013 (3) TMI 41
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....ceedings the assessing authority noted that the appellant had sold most of the goods to registered dealers against ST-1 forms in Delhi. He conducted a cross verification of these sales and found that the purchasing dealers had given a different account of these forms in their ST-2 account. This was put to the appellant for explanation and it was asked to adduce proof of payments, delivery of the goods etc. The appellant filed statements showing the mode of payment by draft. The assessing authority also found that ST-1 forms bearing same numbers were issued to the purchasing dealers. He therefore, wrote letters to get these verified by the respective wards. On the basis of the enquiries, he came to the conclusion that in all ST-1 forms where the ST-2 accounts given by the purchasing dealers were different and the payment was also not by cheque and the appellant was not able to show proof of delivery of the goods, the exemption claimed by the dealer cannot be allowed. The total turnover in respect of these forms came to Rs. 84,94,942/- which was taxed at the rate of 5%. In respect of ST-1 forms issued to M/s Naval Kishore & Co., M/s Durga Trading Co. and M/s Rajan & Co., the assessin....
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....Act the burden is on the purchasing dealer and not upon the appellant who was the selling dealer, and if any breach is committed by the purchasing dealer in the matter of producing the ST-1 forms or in the matter of utilisation of the ST-2 accounts, then the selling dealer- appellant here-cannot be penalised by refusing to accord the exemption. In support of this submission the appellant relied upon several authorities before the Tribunal. It was also submitted that in the case of sales to M/s Aatma Ram Hukamchand and M/s Richo Mal Krishan Swarup also the payments were by draft and there was no proof of delivery but still the first appellate authority allowed the assessee‟s claim and the facts being similar in respect of the sales to other registered dealers, exemption should have been given. In respect of the other sales treating them at par with the sales made to above two concerns, the contention of the appellant appears to have been that the sales tax authorities themselves in the two cases have rightly not considered the fact that the payments were made by draft and the absence of any proof of delivery of the goods to be relevant to the consideration of the question of a....
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....n placing the burden upon the dealer to show that the forms issued by the registered purchasing dealers in ST-1 were genuine and in consequently upholding the assessment and the appellate orders refusing to allow deduction of the sales made by the appellant to them under section 4(2)(a)(v) of the Delhi Sales Tax Act, 1975?" 9. Section 4 of the DST Act, 1975 prescribes the rate of tax payable by a dealer on the sales effected by him. The tax is payable on the "taxable turnover". Sub-section (2) defines "taxable turnover" as meaning that part of the turnover of a dealer during the prescribed period in any year which remains after deducting therefrom certain sales. These sales are enumerated in Clause (a) of the sub-section. Sub-clause (v) provides for deduction of the sale by the dealer to another registered dealer of different types of goods and sales made under different situations or circumstances. Some of these sales are of goods specified in the registration certificate of the purchasing dealer for being intended for use as raw materials in the manufacture of any goods in Delhi, meant for sale by him inside Delhi or in the course of any other such trade or commerce or in the c....
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....sales of declared goods which have special importance in inter-State trade or commerce, and other classes of goods which are purchased at an intermediate stage in the stream of trade or commerce, prescribed low rates of taxation, when transactions take place in the course of inter-State trade or commerce. Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations made to him. He must satisfy himself that the purchaser is a registered dealer, and the goods purchased are specified in his certificates: but his duty extends no further. If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the Rules and the representation is recorded in the certificate in Form „C‟ the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods he incurs a penalty under section 10. That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer. The selling dealer is under the Act authorised to....
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....ties can examine whether certificate is "farzi" or not, or if there was any collusion on the part of selling dealer - but not beyond - i.e. how the purchasing dealer has dealt with the goods. If in an appropriate case it could be established that the certificates were "farzi" or that there was collusion between the purchasing dealer and the selling dealer, different considerations would arise. But in the facts of this case as noticed before, the facts have been found to the contrary by the appellate authority though that was the finding of the sales tax officer. The question has been reframed for that purpose i.e. to bring about the real controversy in the background of the facts found in this case. In the facts and circumstances of this case, the question posed is academic because it has not been found by the appellate authority that neither the goods have been consumed by the purchasing dealer and not sold to the consumer in terms of the registration certificates furnished by the purchasing dealer, nor that the certificates were forged or fabricated." In A.D.M. Stores And Anr. vs Commissioner Of Sales Tax And Ors, (1966) 18 STC 305, a single judge of the Punjab High Court (Circ....
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....provision rubs against the grain of the petitioners‟ contentions." 11. The judgments cited above establish the proposition that it is not the burden of the selling dealer to show that the declaration in form No.ST-1 submitted by the purchasing dealer were not spurious or were genuine or that the conditions subject to which the forms were issued to the purchasing dealer by the sales tax department were complied with. This aspect has been dealt with elaborately in the judgments cited above, the bottom-line being that the burden will shift to the selling dealer only if it is shown that the selling dealer and the purchasing dealer had acted in collusion and connived with each other in order to evade tax by obtaining spurious forms of declaration. 12. The assessment order dated 28.03.1988 makes no such allegation. It refers only to certain discrepancies between forms ST-1 and the ST-2 accounts given by the purchasing dealers. That is not for the selling dealer to explain. The assessment order also refers to the unsatisfactory details said to have been given by the selling dealer on account of delivery of goods. This however, has not been elaborated in the assessment order. The "....
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....in its possession were fake or non-genuine, that it was brought to its notice by the enforcement branch of the sales tax department, that from the forms it was not obvious that they could be fake or non-genuine, that it had discharged its responsibility by ensuring that the entities to whom it sold goods possessed appropriate registration certificates which duly included the items sold to them and that in these circumstances the dealer could not be held responsible for the conduct of the purchasing dealers. It was accordingly submitted that no penalty should be imposed on it. The Addl. Commissioner of Sales Tax rejected all these submissions and held that the appellant - dealer was unable to prove that he was not in collusion with the purchasing dealers and that despite ample opportunity, it had not proved its innocence. The Addl. Commissioner of Sales Tax also noted that the appellant did not take any action against the purchasing dealers even after it was brought to its notice that the ST- 1 forms were fake. He also found that the purchasing dealers had made very nominal investment in their business and they were registered only a couple of months before their transactions with ....
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....e withdrawn with liberty to the appellant to approach the Tribunal with a review or reference application. The order of this Court was passed on 06.07.2004. Thereafter, the appellant filed a review application before the Tribunal which was disposed of by the Tribunal by order dated 17.11.2004. Paragraphs 15 & 16 of this order are relevant and are as below: - "15. We may that this tax dispute has continued for may (sic) years and that there is no evidence referred to in the orders of the Ld. STO, Ward -36 dated 19.6.85 and of the Ld. Addl. CST dated 7.10.85 from which any finding of prior knowledge or belief of the appellant company about the falsity of the declarations taken from its possession on 13.7.83 and resultant inference about collusion between the appellant company and the four purchasing dealers referred to above during the relevant year can be drawn. We cannot also fail to note that the order of the Tribunal dated 29.6.88 not having been challenged under Section 45 on the ground that it set aside the earlier assessment of tax and interest without recording any explicit finding about the genuineness of its claims of sale of goods to registered dealers and that the direct....
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.... an ex-parte order passed under Section 56, imposing penalty under section 50(1)(a) of the Act, of Rs. 42,81,550/- on the dealer for producing a declaration under the second proviso to section 4(2)(a) in Form ST-1 which it knew or had reason to believe to be false. An appeal was filed against the penalty order before the first appellate authority who rejected the appeal by order dated 08.02.1994. A further appeal was filed to the Tribunal which sustained a penalty of Rs. 25,73,072/- by order dated 30.12.2010. This is the order which is impugned in the present appeal. 20. The following substantial question of law is framed: - "Whether the Tribunal was right in law in sustaining the penalty to the extent of Rs. 25,73,072/- out of the penalty of Rs. 42,81,550/- imposed under section 50(1)(a) of the DST Act?" 21. The main contention on behalf of the appellant is that having regard to the observations of the Tribunal in its order dated 17.11.2004 in the assessment proceedings, which order has become final, the Tribunal was not justified in partly sustaining the penalty. It is contended further that the ingredients of section 50(1)(a) of the DST Act have not been sat....
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....to discharge the said burden. The fact that fake declaration forms were found by the survey team in the premises of the appellant, itself shows that the appellant was holding these fake declaration forms. Thus the authorities below did not commit any illegality in coming to the conclusion that the appellant had committed an offence u/s 50(1) (a) of the Local Act. Since for the offence u/s 50(1)(a) of the Local Act the appellant could be imposed a penalty amounting to 2.5 times the tax which it would have avoided and so in our considered view the Ld. FAA did not commit any illegality in upholding the order of the Ld. STO ward 63. 28. In so far as the quantum of penalty is concerned, we hold that appellant deserves to be given the benefit of the tax effect amounting to 2.5 times of Rs. 6,83,391/- i.e. a benefit of 17,08,477.50. Thus, a sum of Rs. 17,08,477.50 is to be deducted from the penalty amount of Rs. 42,81,550/- The appellant is now required to deposit only Rs. 25,73,072.50." 23. We find that the Section 50 of the DST Act relates to offences which are punishable with rigorous imprisonment or with fine or with both. It does not provide for any penalty. However, section 56 pro....