TaxTMI 
TaxTMI 
2010 (7) TMI 941
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....n under section 6(1A)(a) read with rule 10A of the Rules, the assessing officer forfeited the tax collection and levied penalty under section 67(2) of the Act for the alleged violation. In first appeal, the appellate authority, though cancelled penalty levied under section 67(2), left freedom to the officer to consider penalty under section 72 of the Act, against which the Department filed an appeal and the assessee filed a cross objection which were disposed of by the Tribunal by the order impugned in the O.T. Revision filed by the assessee under section 63 of the Act. The connected W.P. is filed by the assessee for a declaration that form 1F prescribed is ultra vires and beyond the powers of the respondents under rule 10A of the Rules and is applicable only for the purpose of section 6(1A)(b) of the Act. We have heard counsel appearing for the petitioner and the Government Pleader Sri Mohammed Rafiq appearing for the respondent. The main question to be considered is whether the petitioner which is a registered dealer with turnover below Rs.10 lakhs is entitled to collect tax without obtaining a prior permission in terms of rule 10A of the Rules. According to the petitioner, ru....
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.... to pay tax in accordance with the provisions of subsection (1A) of section 6 shall file application in form 1F before the assessing authority. The option shall be deemed to have been accepted by the assessing authority as and when the assessing authority acknowledges the receipt of such application." The only question is whether form 1F prescribed under rule 10A and rule 10A as such are applicable to a registered dealer for collection and payment of tax, if the turnover of such dealer is below the non-taxable limit of Rs.10 lakhs. While the contention of the petitioner is that dealers like petitioner who have registration are entitled to collect tax and remit the same without any prior permission under rule 10A, the contention of the Government Pleader is that both dealers with turnover below the nontaxable limit of Rs.10 lakhs falling under sub-clause (a) and dealers in whose hands sale of any goods are exempted, covered by sub-clause (b) of section 6(1A), should obtain advance permission from the officer under rule 10A by filing form 1F prescribed under the said rule. It is an undisputed position that a dealer whose annual turnover is below the limit prescribed, namely, Rs....
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....to dealers to avoid running the risk of a liability on assessment if they take registration, collect and remit tax irrespective of whether the turnover exceeds the non-taxable limit or not. Therefore, we hold that there was nothing illegal or wrong in the petitioner taking registration, collecting and remitting tax for the year in question when the petitioner did not have minimum turnover that attracts liability. The next question to be considered is whether the petitioner was bound to take prior permission for collection and remittance of tax under rule 10A by filing application in form 1F. The contention of the petitioner is that rule 10A has no application for dealers like petitioner and it applies only to dealers covered by section 6(1A)(b) of the Act. However, the Government Pleader submitted that rule 10A applies to both the categories of dealers covered by clauses (a) and (b) of section 6(1A) and the form makes it clear that it applies only to dealers with turnover below Rs. 10 lakhs. The Counsel for the petitioner has relied on circular No. 5/2006 wherein illustrations are given pertaining to the scheme of collection of tax by dealers who are not liable to pay tax and ac....
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....ealer to collect tax, it has the authority to decline the option by rejecting the request by the dealer. In other words, it is up to the State to decline the option requested for by the petitioner and deny permission to collect tax on the commodity, if the State intends to supply the commodity to the customer free of tax. In this context we notice that the proviso to section 30(3) also makes it clear that the dealer enjoying exemption in respect of a commodity has the option to collect tax which necessarily means that the officer based on application filed under rule 10A is entitled to grant it or reject it. Nowhere else in the statute there is a provision requiring a registered dealer to seek independent permission from the officer to collect tax during the year his turnover is below the nontaxable limit of Rs. 10 lakhs. All what section 6(1A) and section 30(4) states is that the dealer who has turnover below non-taxable limit of Rs. 10 lakhs, collecting and remitting tax, will be liable to pay tax on the entire taxable turnover under section 6(1) of the Act. As rightly pointed out by the counsel for the petitioner, the illustration given to the circular makes it clear that the pe....