TaxTMI 
TaxTMI 
2015 (11) TMI 1320
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....ority decision is right in holding that the appellant is not entitled to benefit of Form ST 35 for the sales made to buyers outside Delhi, which has resulted in enhancement of turnover" 2. In STA Nos. 1, 3, 17, 18 and 24 of 2013 the following further question was framed for consideration: "(ii) Whether the majority opinion was right in holding that the levy of penalty and/or interest under Section 56 of the Delhi Sales Act, 1975 was just and proper?" 3. In STA Nos. 1, 5, 6, 17 and 24 of 2013 the following additional question was framed for consideration: "(iii) Whether the conditions for reopening, as stipulated under Section 24 of the Delhi Sales Act, 1975, are satisfied?" 4. The Appellants are all authorised purchasing dealers as well as extended first point sellers in terms of the Delhi Sales Act, 1975 ('DST Act'). They are engaged in the business of purchase and resale of taxable goods as a dealer under the DST Act as well as the Central Sales Tax Act, 1956 ('CST Act'). Background facts 5. Illustratively, the facts concerning Classic Engineering Company (CEC), the Appellant in STA No. 1 of 2013, are narrated. CEC was granted an authorisation cer....
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....may be noted that through a foot note introduced on 5th August 1986, sales by an authorised registered dealer to another authorised registered dealer are allowed against form ST-35 inside Delhi. Where the extended first point sales were covered under Rule 11 (XXXIV A) an application was to be filed in Form-36A for grant of authorisation in Form ST-37A. 9. At this stage a brief explanation is called for as regards 'extended first point seller'. 'First point' means that the goods are taxed in the hands of the first seller in Delhi, i.e., in the hands of the importer who imports goods from outside Delhi and sells the same for the first time in Delhi or in the hands of the manufacturer who manufactures the goods and sells the same after manufacturing for the first time in Delhi. In case of first point taxable goods, registered dealers can issue an authorisation certificate to be authorised to buy first point taxable goods without payment of tax by issuing a declaration in ST-35 in spite of the fact that the goods are taxable at first point. 10. There was a representation to the Government by large companies that after import into Delhi they do not directly sell the goods ....
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....ty for such sum as the said authority may, having regard to the circumstances of the case, fix. 14. Thus it is seen that Rule 8 provides that the declaration shall be printed under the authority of the Commissioner. It can be obtained by the purchasing dealer, who intends to purchase goods on the strength of the authorisation certificate, by submitting an application to the concerned assessing authority. After such assessing authority is satisfied with the genuineness of the request made by the dealer and if he is satisfied that the dealer has submitted a complete account of the forms earlier received and is not a defaulter in payment of tax or in filing the returns, the assessing authority may issue the necessary forms. 15. With effect from 30th September 1999, a change was brought out to Rule 11 (XXXIV) and (XXXIVA) of the DST Rules. The amendment was to restrict the extended first point selling to make sales only inside Delhi. In other words, an extended first point seller could make purchases without payment of tax by furnishing a declaration in the amended Form ST-35/1 that the purpose for which such goods were to be used was only for "resale inside Delhi". Simultaneousl....
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....999 restricting the extended first point selling to make sales only inside Delhi, the sales tax authorities continued to issue the old and unamended form ST-35/1, i.e., the form which existed prior to 30th September 1999 and which permitted a dealer to make purchases for making sales in the course of inter-state sales as well as inside Delhi. Therefore it could not be said that the declarations given by the dealer in such unamended forms were false declarations so as to attract the first proviso to Rule 11(XXXIVA). Reassessment proceedings 20. In the case of CEC, its sales tax assessment for the Assessment Year ('AY') 2001-02 was framed both under the DST Act as well as the CST Act by orders dated 22nd March 2003. This was done after the assessing authority verified the complete books of accounts, the purchases made against declarations and the declarations received and issued. 21. Somewhere down the line, the assessing authorities appear to have realised the error and instructions were given for reopening all cases in which declarations in Form ST-35/1 were issued. The instructions were that if the declarations were for the purposes of making inter-state sales they should....
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....o all the appeals, Question 2 concerning levy of penalty and interest is relevant for STA Nos. 1, 3, 17, 18 and 24 of 2013. Question No.3 pertaining to reopening of assessment under Section 24 of the DST Act arises in STA Nos. 1, 5, 6, 17, and 24. Question 1: Effect of non-issuance of amended Form ST- 35 28. The Court first proposes to deal with the common question raised in all the appeals viz., whether the majority of the Tribunal is right in holding that the Assessees were not entitled to the benefit in Form ST-35 for inter-state sales made outside Delhi resulting in the enhancement of their respective turnovers. 29. To recapitulate, the dealers in these cases do not deny that an amendment took place to Rule 11 (XXXIV) and (XXXIVA) with effect from 30th September 1999. Their case, however, is that with the amended forms not actually being issued to them, they continued filing declarations using the unamended Form ST-35 and ST-35/1. Their position is that for no fault of the Appellants, and on account of the failure of the sales tax authorities to print the amended forms, the dealers cannot be made to bear the burden of additional tax, interest or penalty. The majority d....
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....king inter-state sales since the Appellant could not have visualised at the time of purchase whether the goods were going to be sold in Delhi or outside Delhi. Further even at the time of inter-state sales violation could not be said to have taken place since till that point in time the amended Form ST-35/1 was not even printed much less issued. A purchasing dealer can be said to have violated the declarations only when he acts contrary to the condition expressly stated in the declaration. In the present case dealers acted in consonance with the declarations. 31. In reply it is submitted by Mr. Satyakam, learned counsel appearing for the Respondent, that at no point in time did any of the dealers submit any requisition under Rule 8(3)(i) of the DST Rules for issuance of the amended Forms. He stated, on instructions, that the new forms were in fact printed. Thirdly, Mr. Satyakam sought to distinguish the decision of the Supreme Court in Polestar Electronics (P) Ltd. (supra) by contending that in that case the amended Forms were in fact not issued whereas in the present case the amended Forms were also notified in the official gazette and, therefore, it is not as if the dealers we....
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.... Forms and the dealers kept using the unamended Forms by making purchases. In that context, the Supreme Court observed as under: "If you have amended the Act or the Rules, but you have not amended the declaration form as per the Act or the Rule, and the dealer uses the goods as per the purposes declared in declaration, you cannot say that there is violation of the declaration and you cannot tax the purchasing dealer." 31.5. It was noted in Polestar Electronics (P) Ltd. (supra) that although the amendment took effect from 28th May 1972, the amended Forms were not issued till 29th March 1973. As a result, from 28th May 1972 to 29th March 1973 the Form with declaration continued to be the same as before and carried the statement that "goods were purchased by the purchasing dealer for use by him as a raw material in the manufacture of goods for sale" without any restriction as to the place of manufacture or sale and this was the Form in which the declarations were given by the Assessees to the selling dealers when they purchased the goods. The Supreme Court in those circumstances observed as under: "Now, if the declarations given by the assesses stated the purpose ....
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.... could be saddled with liability to tax under the second proviso when they have literally complied with the statement of intention expressed in the declarations given by them to the selling dealers." 31.7. The Supreme Court in Polestar Electronics (P) Ltd. (supra) itself distinguished the earlier decision in Modi Spinning Mills (supra). In Modi Spinning Mills (supra), the declaration form had been amended to provide that the declaration must set out the intention of the purchasing dealer to use the goods purchased in the manufacture 'in the State of Punjab' of goods for sale. The Appellant there had issued a declaration in the amended ST-22 to the selling dealer from whom cotton had been purchased for the purposes of manufacture. Despite having furnished such declaration, the Appellant claimed deduction in its return on the basis of the registration certificate ST-3 which did not contain the words "in the State of Punjab of goods for sale." In those circumstances it was held that the Appellant had violated the declaration given in the amended form because the cotton was sent for the manufacture of goods out of Punjab. Therefore, on the one hand the Assessee violated the ....
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....r words, he was not able to point out that the contention had been raised at any of the stages of the proceedings prior to the present appeals. This being a pure question of fact and not having been noticed by any of the authorities including the Tribunal, the submission to this effect by the Revenue for the first time at this stage cannot be accepted. 35. In any event, the fact remains that with the Forms not having been printed and in case of the some of the Appellants the unamended Forms being continued to be issued, the Assessees could not be held to have made any false declaration. The observation of the majority judgment that "non-printing of Forms due to administrative reasons was a mere technicality which cannot make the statutory rule redundant" overlooks the detailed procedure under the DST Rules itself for the printing and issuance of Forms by the assessing authority. Analysis of the forms 36. In the present case, the unamended Form ST-35 reads as under: "Form ST-35 (see rule 11) FORM OF DECLARATION FOR PURCHASES BY REGISTERED DEALERS HOLDING AUTHORISATION Issued to holder of Authorisation No. Serial No............... Seal of issuing auth....
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.... dealers to strike out those portions of the above Forms which are 'not applicable' in terms of the asterisk marks given in the Form while giving the declaration in the above Form after 30th September 1999. This submission, in fact, appears to have been accepted by the majority judgment. The contention of the Assessees that they could not have struck out anything in view of the instruction by way of the stamp affixed on the Form stating 'cutting not allowed' was held by the majority to be 'not tenable' by interpreting the words 'cutting not allowed' to mean that cutting out of the various heads is not allowed while entering the particulars in a Form manually. The instruction 'Strike out the words/expressions not applicable' appearing at in relation to asterisks alongside certain options/phrases was held to imply that striking out options within the heads was required to be done. 38. However, as rightly pointed out in the minority judgment, it is only by Circular dated 13th April 2004 issued by the Deputy Commissioner (Forms) that all the STOs, ASTOs were directed to strike out the terms mentioned at Serial Nos. 1, 2 and 3 from Form ST-35 before issuing them to the dealers. This ....
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....ioner of Sales Tax, Delhi (supra). No false declaration 42. The Court also accepts the plea of the Appellants that this was not a case of making a false declaration. The Appellants were issued Form ST-35 and ST-35/1 and declarations were given in both forms, which at the time of making of these declarations, could not be held to be false declarations. Another decision which is relevant in this context is MMTC v. State of Orissa 1987 65 STC 129 (Ori) where again it was observed that when the Form is not amended by the time of furnishing the declaration it was impossible on the part of the Assessee to furnish a declaration in the amended Form. 43. The Court further notices that after the amendment to Rule 11 (XXXIVA) with effect from 30th September 1999, the amended Form ST-35/1 provides for a declaration as under: "Form ST-35/1 (See rule 11) FORM OF DECLARATION FOR PURCHASES BY REGISTERED DEALERS HOLDING AUTHORISATION IN FORM ST-37A Issued to holder of Authorisation No. Serial No............... Seal of issuing authority To ........................(Seller) ........................(Address) [Certified that the goods ....
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.... that the price of the goods purchased would be included in the taxable turnover of the Assessees who are purchasing dealers as well as extended first point sellers under the DST Act. 46. One more submission that was made was that in terms of Clause 7A of the Return Forms which had been amended with effect from 30th September 1999, the Assessees were required to include in the taxable turnover the purchase price of the goods purchased against Form ST-35/1 and sold in the course of inter-state trade and commerce. It was contended that by non-complying with that requirement, the Assessees had violated the first proviso to Rule 11 (XXXIVA). 47. As pointed out in the dissenting opinion of the Chairman of the Tribunal, Clause 7A refers to Rule 23A(2) which provides that where a dealer purchases goods on the strength of the registration certificate issued under Rule 16 and against Form ST-35(1) but utilises such goods not by way of sale but for a purpose other than that mentioned in Rule 11(XXXIVA) then the purchase price would be included in his taxable turnover. However, Rule 23A(2) itself is not applicable because the condition laid down for its applicability did not exist. In o....
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....elevant since in the original assessment framed by the assessing authority, which was after the amendment came into force, it was noted that "Dealer has claimed exemption against first point taxable sales which is allowed after verification from the books of accounts...". The assessing authority thus examined the records, the declarations and the books of accounts produced by the Assessees. There was no new information on the basis of which the assessing authority could have reopened the assessment. 52. In other words, what the assessing authority was seeking to do by invoking Section 24 of the DST Act was to review the earlier order passed by him earlier after having realised that the Assessees ought not to have furnished the declarations under the unamended Forms in ST-35 in respect of the inter-state sales. There is a distinction between the reopening of an assessment under Section 24 of the DST Act and the exercise of revisionary powers by a superior officer under Section 46 of the Act. Thus a Commissioner could form the opinion that the order of an assessing authority is prejudicial to the interests of the Department. In other words, Section 24 cannot substitute for the pow....