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2012 DIGILAW 166 (JK)

Gladsome Enterprises, Shalamar Road, Jammu v. Dy. Commissioner, Sales Tax (Appeals), Jammu

2012-04-16

M.K.Hanjura

body2012
1. By this order it is proposed to dispose of an appeal filed against the order of the Ld. Dy. Commissioner, Commercial Taxes (Appeals) (Appellate Authority), Jammu. The string of incidents, put in a sequence, as they emerge from a study of the file, under consideration, are, very briefly as under: 2. The appellant during the accounting year 2000-2001 had claimed exemption of sales tax for Rs. 1,90,70, 145.91 being sales made to SSI units and in support of the claim filed declaration Forms issued by the purchasing units. The learned Assessing Authority rejected the claim for an amount of Rs. 1,01, 08, 741/- and added to the taxable turnover of the dealer a tax at the rate of 12% and created demand on account of Tax to the tune of Rs. 12,76,220/- and interest to the tune of Rs. 17,86,374/-. The relevant portion of the order disallowing the claim of exemption to the tune of Rs. 1,01,08,741/- is reproduced herein below word for word and letter for letter: "The dealer has claimed exemption of sales of Rs. 1,90,70.145.91 being sales made to the SSI Units and in support of his claim he has filed declaration Forms issued by the principal units. Before the exemption is granted as claimed by the dealer a report has been received from Srinagar Division and it has been found that the dealer has claimed an amount of Rs. 1,02,276,615/- as material has been supplied to M/s General Engineering Works who has issued Form No. 2388, 2389 and 2390 amounting to Rs. 1,18,874/- and as such there is a difference of Rs. 1,01,08,741 of declaration Forms which has been claimed by the dealer for exemption is rejected and shall be assessed to tax at the normal rate of tax". 3. Being aggrieved by the order, the appellant filed an appeal before the Deputy Commissioner, Commercial taxes Appeals who while rejecting the appeal and parrying the grounds of appeal made the order of the learned Assessing Authority more stringent by observing:- "Apparently, therefore, there has been collusion between the appellant and the purchasing dealer with the result the State Exchequer has been put to loss". 4. Being aggrieved of the said order, the present appeal has been filed by the appellant on the following grounds:- 1. 4. Being aggrieved of the said order, the present appeal has been filed by the appellant on the following grounds:- 1. That the learned Assessing Authority as well as Deputy Commissioner, Sales Tax Appeals has been unjustified in rejecting the declaration Forms filed by the dealer without giving reasonable opportunity to the appellant to submit his point of view. 2. That the liability of the dealer to sell the goods is completed with the receiving of the declaration Forms which the appellant has fulfilled and also filed declaration forms at the time of assessment. This has willfully been ignored by the same Assessing Authority as well as Deputy Commissioner Sales Tax Appeals, so the order is liable to be quashed. 3. That the tax liability falls on the shoulders of the purchasing dealer and not on the selling dealer has been held by various High Court Judgments and the Apex Court. The order of the Assessing Authority as well as Deputy Sales Tax Commissioner, is, therefore, liable to be quashed. 4. That the appellant had made Sales as per entry 77 Schedule G of SRO 137 to SSI unit holder filed against the declaration Form prescribed under the Act and also collected the declaration Form from SSI unit holder and submitted before the Assessing Authority, and so there is no tax liability against the dealer. 5. That any other ground that might arise at the time of argument shall be discussed then and there. 5. For proper appreciation of the grounds of appeal, it is worthwhile to refer the relevant sections of the J&K General Sales Tax Act, 1962 reproduced here under:-- "Section-4: Liability to tax under the Act:-Subject to the provisions of this Act, every dealer except the one dealing exclusively in goods declared tax free under section 5, shall pay for each year tax on his (taxable turnover) at a rate {not exceeding forty percent of such turnover as may be determined by the govt. in the Govt. Gazette and such tax shall be charged on the sale of goods once only. Section-5: Exemption from tax(l) -- The Govt. may, subject to such restrictions and conditions as may be prescribed including conditions as to license and licence fees, by order exempt in whole or in part from payment of tax any class of dealer or any grounds or class or description of goods." 6. The Govt. Section-5: Exemption from tax(l) -- The Govt. may, subject to such restrictions and conditions as may be prescribed including conditions as to license and licence fees, by order exempt in whole or in part from payment of tax any class of dealer or any grounds or class or description of goods." 6. The Govt. of Jammu and Kashmir issued SRO 137 dated 28th April 2000 effective from 1st of May, 2000 and in exercise of its power under section 4(1) levied tax on the turnover at the rates mentioned in schedule (a) to (f) and in exercise of powers under section 5 accorded exemption from the payment of tax leviable under the J&K Sales Tax 1962 to the goods, dealers and class of dealers as specified in Schedule-G. 7. The Schedule-G which is relevant in the context of this appeal reads as under:- "SRO 137 dated 28-04-2000 Schedule "G" Goods exempted from payment of tax under section 5 of the Act. Entry 77: Raw material excluding items listed below, sold to small scale industrial units (both in public and private sector registered on or after 01-07-1990 and to SICOP shall be exempted from payment of tax leviable under the said Act, subject to the production of the declaration as may be prescribed by the Commissioner in this behalf:- 1. Plywood, Laminated Sheets and other synthetic sheets. 2. GC/GP/Iron Sheets. 3. CR/HR Coils/BR Sheets. 4. Tea 5. Varnish and Paints. 6. Cushion Mattresses, Pillows, Bed Covers and other articles made out of foam. 7. Glass Sheets. 8. Cement. 9. Copper Circles. 10. Oleo Resin. 11. Timber 12. Tin 13. Marble". 8. The above entry envisages sale of raw material except the ones mentioned supra against the declaration Forms prescribed by the Commissioner to be exempt from Sales Tax. 9. In the instant case, the appellant has conducted sale to M/s General Engineering Works, Nowal Bazar, Srinagar an SSI Unit registered after 01-07-1990 against declaration Form NO. 2388, 2389 and 2390 for Rs. 25,77,592/-, Rs. 25,12,596/- & for Rs. 51,37,427/-. These Forms are issued by the Department. The Forms received by the appellant bear stamp and seal of the Sales Tax Department duly filled in and signed by the issuing dealer and, therefore, its acceptance was bonafide. 2388, 2389 and 2390 for Rs. 25,77,592/-, Rs. 25,12,596/- & for Rs. 51,37,427/-. These Forms are issued by the Department. The Forms received by the appellant bear stamp and seal of the Sales Tax Department duly filled in and signed by the issuing dealer and, therefore, its acceptance was bonafide. Merely because the purchasing dealer has shown a different amount in the counter file or consumption statement of the declaration Forms filed by him with, the department, the appellant cannot be held responsible. In the declaration Forms the amount of bills was clearly mentioned and the Forms were duly signed by the purchasing dealer. Therefore, for any mistake, or misrepresentation, made by the issuing dealer, the appellant cannot be held liable. For the fault or mistake or misrepresentation by the issuing dealer the necessary action can be taken, under the provisions of the Act, against such dealer and not against the appellant. 10. Even otherwise, the appellant had no opportunity to rebut the report, received from the Srinagar Division, as alleged in the assessment order and on which the learned Assessing Authority relied. There was no evidence much less a reliable or dependable evidence to show that the declaration Forms furnished by the appellant were either not genuine or were forged. Moreover, the learned Appellate Authority, without any rhyme and reason and without any evidence brought on record, added to the Severity of the impugned order by observing that apparently there has been collusion between the appellant and purchasing dealer resulting in the state exchequer having been put to loss. It definitely was not the case of the learned Assessing Authority that the declaration Forms furnished by the appellant were "farzi" or "not genuine" or that there was a collusion between the buyer and appellant". The observation of the learned Appellant Authority being only chimerical is not tenable in law. It definitely was not the case of the learned Assessing Authority that the declaration Forms furnished by the appellant were "farzi" or "not genuine" or that there was a collusion between the buyer and appellant". The observation of the learned Appellant Authority being only chimerical is not tenable in law. Reliance is placed on Star Paper Mills Ltd. Vis Commissioner of Sales Tax, D.P. Lucknow STC 139 (2005) 245 wherein Hon'ble High Court, after citing the various Judgments of the Hon'ble High Courts and the Apex Court held as under:- "That section 3AAA has to be interpreted in a reasonable manner unless it is shown that declaration in Form III-A was apparently farzi or there has been collusion between the selling and the purchasing dealers, the furnishing of Forms III-A is enough proof to relieve the selling dealer of his liability and it was found that the purchasing dealer was not authorized to issue the declaration in Form III-A and had furnished a false certificate, The remedy of the department is proceeding against the purchasing dealer and not against the dealer who has acted bonafide". 11. Applying the ratio of the law laid down above to the facts of the instant case if at all the revenue had to proceed against anyone it could be the purchasing dealer and not the appellant. The orders of the Appellate and the Assessing Authority cannot, therefore, sustain in the eyes of law and are accordingly set aside. File shall be consigned to records after its due completion. The record received by the Tribunal shall be sent back.