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Madhya Pradesh High Court · body

2001 DIGILAW 362 (MP)

Rajani Extractions Limited v. Sales Tax Officer

2001-04-24

A.M.SAPRE

body2001
Judgment ( 1. ) THE challenge in this petition filed under Articles 226 and 227 of the Constitution of India is essentially to the order (annexure P12 ). In substance, by this order and the orders passed earlier to one the sales tax authorities have refused to grant separate registration to the petitioner for their one unit under the provisions of the Madhya Pradesh General Sales Tax Act, 1958 (since repealed ). The question is, whether the action of the sales tax authorities in refusing to grant registration is sustainable or not ? In order to appreciate the issue involved, it is necessary to state the factual background of the case that eventually brought the issue in writ to this Court. ( 2. ) PETITIONER is a limited company formed by the members of one Rajani family. Earlier these very members were carrying on business of solvent extraction by and under the name "rajani Extractions". The partners of the firm then formed company (i. e. , petitioner) and made this company as one of the partner of the said firm by amending the partnership deed. Later on, after some time, the partnership-firm was dissolved and the entire assets and liabilities including the running business of the dissolved firm was taken over by the petitioner-company. ( 3. ) BY annexure P5, the petitioner applied for temporary new registration under the provisions of the M. P. G. S. T. Act. It was the case of petitioner that the registration is required for their new unit No. 2. The Sales Tax Officer made an inquiry and by its order dated January 12, 1993 (annexure P6) rejected the application. The petitioner then filed a revision before the Deputy Commissioner against an order dated January 12, 1993. By order dated June 24, 1993 (annexure P9), the Deputy Commissioner (revisionary authority) allowed the revision and set aside the order dated January 12, 1993. In the opinion of the revisionary authority there was no proper inquiry that was done by the Sales Tax Officer and hence, the order was held not sustainable. The matter was, thus, remanded to the aales tax authorities for reconsideration of the application. After the remand, the authorities held an inquiry, called for the reports from Sales Tax Inspectors, who on date October 21, 1993 submitted its report. The matter was, thus, remanded to the aales tax authorities for reconsideration of the application. After the remand, the authorities held an inquiry, called for the reports from Sales Tax Inspectors, who on date October 21, 1993 submitted its report. Eventually by order dated October 4, 1993/october 27, 1993 (annexure P12), the sales tax authorities (S. T. O.) rejected the application by his reasoned order. It is against this order (annexure P12) the petitioner has felt aggrieved and filed this petition under Articles 226 and 227 of the Constitution of India. As stated supra, the question that therefore, arises for consideration is, whether the order dated October 4, 1993/october 27, 1993 (annexure P12) rejecting the petitioners application for temporary registration is legal or proper. ( 4. ) THE respondents (sales tax authorities) have supported the impugned orders both on facts as also on law. ( 5. ) HEARD Shri M. S. Choudhary, learned counsel for the petitioners and Shri Prakash Verma, learned Government Advocate, for respondents. ( 6. ) ASSAILING the legality of the impugned action and the resultant orders passed by the authorities, learned counsel for the petitioner mainly submitted that authorities have erred in rejecting the application. Taking through the factual history as to how the petitioners came into existence, i. e. , from firm to limited company and then setting up of new units, learned counsel urged that the authorities are bound to grant temporary registration once it is applied by any person. Learned counsel then relied on several exemption notifications with a view to show that it is for the State Level Committee to decide as to whether petitioner is entitled to claim the exemption or not and not for the sales tax authorities while considering the case of grant of temporary registration. These were mainly the submission which were pressed in service to assail the orders impugned. ( 7. ) IN reply, learned counsel for the State while supporting the impugned order urged that mere perusal of impugned order (annexure P12) would indicate that it deserves to be upheld. Learned counsel urged that the impugned finding which resulted in rejection of the application made by the petitioner are based on factual inquiry which was needed to be done with a view to find out the exact nature of business for which the petitioner had applied for. Learned counsel urged that the impugned finding which resulted in rejection of the application made by the petitioner are based on factual inquiry which was needed to be done with a view to find out the exact nature of business for which the petitioner had applied for. It was urged that whole thing was found to be fishy and secondly, the petitioner having got the earlier certificate amended by inserting the new product, there does not arise any occasion to issue any such fresh registration certificate. It was also urged that the remedy of petitioner to assail the impugned order was in filing revision to Deputy Commissioner as was done earlier and not in filing writ directly and even if the writ is held to be entertainable the writ court cannot be converted into the Revisionary Court to examine all facts and law but it has to only examine the limited jurisdictional issue. These were mainly the submissions which were then elaborated to support the impugned action. ( 8. ) HAVING heard the learned counsel for the parties and having perused the record of the case, I find no merit in this writ. The facts which are now based on factual inquiry conducted by the sales tax authorities and found proved being matter of impugned orders, would clearly indicate that in fact no new unit No. 2 as such was set up. ( 9. ) THE grant of registration certificate to any dealer is governed by Section 16 and Section 16-B of the M. P. G. S. T. Act, 1958. Section 16 deals with grant of voluntary registration whereas, Section 16-B deals with grant of provisional registration. In either case, the holding of an inquiry and the satisfaction of an authority granting any such certificate is must. The nature of inquiry and its extent is a matter of discretion and varies from case to case. It must appear to the authority empowered to grant the certificate, that the dealer who has applied for such certificate whether voluntary or provisional is bona fidely asking for it. The object of holding an inquiry as contemplated in Section 16 and Section 16-B by the authority is to find out the bona fides and genuineness of the application, its worth and whether it is really necessary to grant registration as prayed for. The object of holding an inquiry as contemplated in Section 16 and Section 16-B by the authority is to find out the bona fides and genuineness of the application, its worth and whether it is really necessary to grant registration as prayed for. Submission of learned counsel for the petitioner that the moment an application for registration is made, the authorities are bound to grant registration is, therefore, not acceptable. ( 10. ) AS observed supra, mere perusal of impugned order (annexure P12) indicates that petitioner did not co-operate with the sales tax authorities in an inquiry who asked the petitioner to produce account books. The petitioner failed to even file relevant account books which were demanded. In view of the documents on record, the only conclusion that the authorities could reasonably draw was that no new unit as such came into existence and that the registration granted earlier in the name of petitioner-company for the production claimed to have been started w. e. f. March 4, 1993 after the close of earlier unit w. e. f. March 1, 1992, was legal and proper. Indeed, the authorities oh the basis of enquiry, and the documents filed on record rightly concluded that petitioner was not entitled to claim a registration for their alleged new unit which was nothing but a camouflage in the garb of a new unit This finding could be reached and had to be reached by the Sales Tax Authorities for refusal to grant registration. This finding is not only relevant but binds this Court in its writ jurisdiction--it being a finding based on facts. ( 11. ) ONCE the aforesaid factual finding is reached and upheld all other submissions of the learned counsel for the petitioner which are mostly based on abstract question of law looses its significance. Even otherwise, the submissions made did not have any substance. ( 12. ) AS a consequence of aforementioned discussion, I find no merit in this writ which deserves to be dismissed thereby upholding of the impugned orders. No costs. Security amount, if deposited by the petitioners, be refunded as per rules.