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2017 DIGILAW 405 (GAU)

SANJAY TRADING COMPANY v. STATE OF ASSAM

2017-03-30

AJIT SINGH, MANOJIT BHUYAN

body2017
JUDGMENT : Ajit Singh, J. This revision petition is directed against order dated 5.6.2014 passed by the Assam Board of Revenue, Guwahati, whereby it has dismissed petitioner’s appeal (Case No.58 STA/11) confirming the orders as passed by the Deputy Commissioner of Taxes and Assessing Officer. 2. The petitioner is a partnership firm dealing in sale of cement amongst other things. During Assessment Year 2006-2007, the petitioner had sold cement outside the State of Assam and claimed concessional rate of tax under the Central Sales Tax Act as the sale was made to registered dealers and same was covered by ‘C’ Forms. However, the Assessing Officer did not accept petitioner’s claim of concessional rate of tax in respect of sale made to M/s Meghrudra Enterprises, Shillong, on the ground that it was not a registered dealer in the item ‘cement’. The petitioner then submitted a photocopy of the application dated 1.8.2006 purported to be made by M/s. Meghrudra Enterprises to the Sales Tax Department for inclusion of cement in its registration certificate as well as photocopy of its amended registration certificate, wherein by an amendment dated 8.9.2006, item ‘cement’ was shown to have been included in the registration certificate. But, the Assessing Officer was not convinced and he rejected petitioner’s claim of concessional rate of tax @ 4% and levied tax @ 12.5% and also charged interest thereon. Aggrieved, the petitioner filed an appeal before the Deputy Commissioner of Taxes (Appeals), which was dismissed vide order dated 20.10.2009. The petitioner then filed another appeal before the Assam Board of Revenue, but it too has been dismissed by the impugned order. It is in this background, the petitioner has filed the present revision petition. 3. The record reveals that the Superintendent of Taxes had a doubt whether M/s Meghrudra Enterprises was registered for the item ‘cement’ or not. He, therefore, sought confirmation from the Commissioner of Taxes, Meghalaya and in response, Taxation Department of the State of Meghalaya certified that M/S Meghrudra Enterprises was not eligible to deal in ‘cement item’ and it had fraudulently included ‘cement’ as one of the items in the amended registration certificate which was fake. 4. In the case at hand, the sole question which calls for our consideration is whether the petitioner can escape tax liability on account of fraud committed by the purchasing dealer i.e. M/S Meghrudra Enterprises. 5. 4. In the case at hand, the sole question which calls for our consideration is whether the petitioner can escape tax liability on account of fraud committed by the purchasing dealer i.e. M/S Meghrudra Enterprises. 5. In State of Madras vs. Radio & Electricals Limited, AIR 1967 SC 234 , same issue was dealt with by the Supreme Court and in paragraph 14 of the judgment, it held as under:- “14. The Act seeks to impose tax on transactions, amongst others, of sale and purchase in inter-State trade and commerce. Though the tax under the Act is levied primarily from the seller, the burden is ultimately passed on the consumers of goods because it enters into the price paid by them. Parliament with a view to reduce the burden on the consumer arising out of multiple taxation has provided in respect of 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 certificate: 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 authorized to collect from the purchasing dealer the amount payable by him as tax on the transaction, and he can collect that amount only in the light of the declaration mentioned in the certificate in Form ‘C’. That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer. The selling dealer is under the Act authorized to collect from the purchasing dealer the amount payable by him as tax on the transaction, and he can collect that amount only in the light of the declaration mentioned in the certificate in Form ‘C’. He cannot hold an enquiry whether the notified authority who issued the certificate of registration acted properly, or ascertain whether the purchaser, notwithstanding the declaration, was likely to use the goods for a purpose other than the purpose mentioned in the certificate in Form ‘C’. There is nothing in the Act or the Rules that for infraction of the law committed by the purchasing dealer by misapplication of the goods after he purchased them, or for any fraudulent misrepresentation by him, penalty may be visited upon the selling dealer.” 6. The Supreme Court has thus settled that selling dealer like petitioner is required to satisfy itself that the purchasing dealer was a registered dealer and the goods purchased were actually specified in the latter’s registration certificate. To ascertain the genuineness of the amended registration certificate of purchasing dealer - M/s Meghrudra Enterprises showing inclusion of ‘cement’, we requested Mr. D. Saikia, learned Senior Additional Advocate General, Assam to call for a report from the Superintendent of Taxes, Circle –I, Shillong, Meghalaya. And the Superintendent of Taxes, in his reply, along with supporting documents, has stated in categorical terms that ‘cement’ was never included in the registration certificate of M/s Meghrudra Enterprises nor any amendment was made in the registration certificate to include ‘cement’ during the assessment year, in question. The learned counsel for the petitioner could not dispute the said statement of Superintendent of Taxes. It is, thus, apparent that the petitioner is relying upon a fake document of registration and he was also aware that ‘cement’ was never specified in the registration certificate of M/s Meghrudra Enterprises. This being the situation, petitioner is not entitled for any tax benefit at the cost of State exchequer. 7. The revision petition is accordingly dismissed with cost of Rs.1000/- which shall be payable by the petitioner within 1 (one) month from today to the Department, failing which, the same shall be recovered as arrears of land revenue.