Back
1972 Supreme(P&H) 6
PUNJAB & HARYANA HIGH COURT
Harbans Singh and Ranjit Singh Sarkaria JJ.
Chandra Industries
Versus
State Of Punjab
Letter Patent Appeal No. 3 of 1971,
Decided On : JANUARY 5, 1972
A registration certificate obtained under Section 7 of the Punjab General Sales Tax Act, 1948, takes effect from the date of the application made by the dealer in the prescribed manner, not from the date of its issue.
Headnote:
PUNJAB GENERAL SALES TAX ACT, 1948 - SECTION 5(2)(A)(II) - REGISTRATION CERTIFICATE - EFFECTIVE DATE - APPLICATION FOR REGISTRATION - INTERPRETATION OF STATUTES - PENALTY FOR UNREGISTERED DEALERS - APPLICABILITY - TAX COLLECTION AGENCY - FUNDAMENTAL RIGHT TO CARRY ON TRADE OR BUSINESS - DECLARATION OF PURCHASING DEALER - CLARIFICATION AMENDMENT IN RULES - JUDICIAL PRECEDENTS - EFFECT OF DELAY IN ISSUANCE OF CERTIFICATE - APPLICABILITY OF SECTION 5(2)(A)(II) - REGISTRATION CERTIFICATE TAKES EFFECT FROM THE DATE OF APPLICATION.
Fact of the Case:
The petitioner, M/s. Chandra Industries, a registered firm carrying on the business of manufacturing refrigeration and air-conditioning machinery at Jullundur, filed a writ petition challenging the disallowance of a deduction of Rs. 1,53,475.32 from their gross turnover for the first quarter of the year 1966-67. The deduction was claimed on the ground that the sale proceeds represented the sale of goods to M/s. Refrigeration Products on 31st May 1966, a registered dealer. The Assessing Authority disallowed the deduction as the purchasing dealer did not hold a registration certificate on the date of sale, though an application for registration was pending and the certificate was granted on 3rd June 1966.
Finding of the Court:
The court held that the registration certificate issued to M/s. Refrigeration Products took effect from the date of the application made by them under Section 7(2) of the Act in March 1966. Therefore, on the date of the sale, the purchasing dealer was deemed to be a registered dealer, and the declaration obtained from them in the prescribed form subsequently by the selling dealer duly conformed to Section 5(2)(a)(ii) and the relevant Rules.
Issues: 1. Whether a dealer registered under the Punjab General Sales Tax Act, 1948 (hereinafter referred to as the Act) is entitled under Section 5(2)(a)(ii) to deduct from his gross turnover proceeds of the sale of goods made to a dealer during the period when the application of the latter for getting himself registered as a dealer under Section 7 of the Act is pending with the department. 2. Whether a registration certificate obtained under Section 7 of the Act takes effect from the date of its issue or from the date on which an application for obtaining such certificate is made in the prescribed manner.
Ratio Decidendi: 1. The court interpreted the relevant provisions of the Act and the Rules and found that there was no express provision or necessary intendment compelling the interpretation that the registration certificate shall take effect from the date of its issue and not from an earlier date. 2. The court applied the principle of strict construction of statutes imposing pecuniary burdens or penalties and resolved the ambiguity in favor of the taxpayer. 3. The court held that the reciprocal obligations and duties imposed on the dealer and the registering authority under Sub-sections (2) and (3) of Section 7 and Rule 5 require the dealer to make an application in the prescribed manner and the authority to register the applicant if the application is in order and the prescribed fee is paid. 4. The court reasoned that a dealer who diligently fulfills their obligations under the Act cannot be penalized for the delays and lapses of the authority in issuing the registration certificate. 5. The court emphasized that the dealer's duty to make an application for registration starts with their liability to pay tax and that the registration certificate, though granted later, would relate back to the date of the application. 6. The court interpreted Section 5(2)(a)(ii) and the relevant Rules to conclude that the declaration of the purchasing dealer may not be obtained simultaneously with the sale and can be furnished subsequently along with the return by the selling dealer. 7. The court considered the amendment to Rule 5 in October 1966, which expressly stated that the registration certificate can be valid from the date of the application, as a clarification of the original intent of the Legislature. 8. The court referred to judicial precedents from the Pepsu General Sales Tax Ordinance and the Central Sales Tax Act, which supported the view that the registration certificate relates back to the date of the application.
Final Decision: The court allowed the writ petition, quashed the impugned orders of the Assessing Authority, and remanded the case for a fresh decision in light of the observations made in the judgment.
1. This appeal under clause 10 of the Letters Patent against an order, dated 16th December, 1970, of the learned Single Judge dismissing Civil Writ No. 2655 of 1970, arises out of the following facts :-
2. M/s. Chandra Industries are a registered firm carrying on the business of manufacture of refrigeration and air-conditioning machinery at Jul-lundur. The firm is also registered as a dealer under the Punjab General Sales Tax Act, 1948 (hereinafter referred to as the Act). The mode of payment of the sales tax is quarterly. The petitioner-firm accordingly submitted four quarterly returns for the year 1966-67 to the appropriate authority. The gross turnover for the first quarter (1st April, 1966, to 30th June, 1966), in the return (which only is relevant for the purpose of this case) was Rs. 2,45,456.96. The petitioner-firm claimed a deduction/exemption from the tax, inter alia, for an amount of Rs. 1,53,475.32 in respect of the first quarter, on the ground that this item represented the sale proceeds of the goods sold to M/s. Refrigeration Products on 31st May, 1966. This claim was disallowed by the Assessing Authority on the ground that on the date of the sale, the purchasing dealer did not hold a registration certificate under the Act, though it was proved that on the date of the sale an application for such registration of the purchasing dealer was pending, and, in fact, the requisite certificate of registration was granted to the purchasing dealer on 3rd June, 1966. The first appeal of the assessee was dismissed by the Appellate Authority on 30th June, 1969. Their second appeal was also dismissed by the Sales Tax Tribunal on 5th August, 1970. Aggrieved by that order of the Assessing Authority (upheld by the Appellate Tribunal) M/s. Chandra Industries invoked the writ jurisdiction of this court under Article 226 of the Constitution.
3. The only question that falls to be determined in this case is : whether a dealer registered under the Act is in the matter of his liability to pay tax, entitled under Section 5(2)(a)(ii) to deduct from his gross turnover proceeds of the sale of goods made to a dealer during the period when the application of the latter for getting himself registered as a dealer under Section 7 of the Act is pending with the department. This question further narrows down into the issue : whether a registration certificate obtained under Section 7 of the Act takes effect from the date of its issue or from the date on which an application for obtaining such certificate is made in the prescribed manner.
4. It is not disputed that the application by the purchasing dealer in the present case for obtaining the necessary registration certificate was made in March, 1966. The registration certificate was granted about three months thereafter on 3rd June, 1966, i.e., about three days after the sale in question. It is nobodys case that this delay in the issue of the certificate was due to any defect in the application or any fault of the applicant. We, therefore, take it that this delay in issuing the certificate was only due to the remissness of the office.
5. It will be appropriate to notice here the relevant provisions of the Act, and the Rules framed thereunder. They are :
2. (d) Dealer means any person including a department of Government who in the normal course of trade sells or purchases any goods that are actually delivered for the purpose of consumption in the State of Punjab, irrespective of the fact that the main place of business of such person is outside the said State and where the main place of business of any such person is not in the said State, dealer includes the local manager or agent of such person in Punjab in respect of such business.
2. (i) turnover includes the aggregate of the amounts of sales and purchases and parts of sales and purchases actually made by any dealer during the given period less any sum allowed as cash discount according to ordinary trade practice, but including any sum
