1. The present revision has been filed by the assessee against the order of the Trade Tax Tribunal, Bareilly dated 06.10.2006 passed in Second Appeal No.21 of 2006 for A.Y. 1998-99 (UP). By that order, the Tribunal has dismissed the appeal filed by the assessee against the order of the first appellate authority dated 06.02.2006. In turn, the first appellate authority had affirmed the assessment order whereby the claim raised by the assessee for having affected sales of motor vehicle i.e. scooter to another registered dealer against Form III-A of the UP Trade Tax Act, 1948 has been rejected.
2. The present revision has been pressed on the following questions of law:-
"(1) Whether in view of the judgment of this Hon'ble Court in the case of M/s Gaurav Traders (supra), the order passed by the Trade Tax Tribunal is justified?
(4) Whether in the absence of any material on record to show that Form III-A in question had not been issued by the Department or was stolen or any defect was pointed out, still the benefit can be denied?
(5) Whether the applicant is not entitled to the benefit of Form III-A No.596240 issued by M/s Jyoti Automobiles, Meerut, the purchaser of the applicant for purchase of two wheelers which is liable to be taxed at the point of sale to consumer?"
3. Heard Ms Pooja Talwar, learned counsel for the applicant-assessee and Sri A.C. Tripathi, learned Standing Counsel for the revenue.
4. In brief, it is the submission of the learned counsel for the assessee is that the assessee is a registered dealer, engaged in trading in two wheelers at Badaun. It had purchased the two wheelers namely, scooters from the manufacturer and sold the same to another registered dealer M/s Jyoti Automobiles at Meerut. The two wheelers were taxable at the point of sale to consumer. Since, M/s Jyoti Automobiles at Meerut represented to the assessee that it would sell the two wheelers in the same form and condition and promised to issue statutory Form III-A, acting on that representation, the assessee had made the sale in favour of M/s Jyoti Automobiles without charging tax. M/s Jyoti Automobiles also issued Form III-A to the assessee. However, the Assessing Officer has disallowed the claim made by the assessee owing to the fact that M/s Jyoti Automobiles had not recorded the purchases made by it from the assessee, in it's books of account. Therefore, it has been submitted that M/s Jyoti Automobiles was subjected to tax. No further liability could be fixed on the assessee. Reliance has been placed on a decision of this Court in the case of M/s Gaurav Traders, 209, Kanoon Goyan, Meerut Vs. The Commissioner of Trade Tax, UP Lucknow 1996 NTN 262, wherein it has been held that the selling dealer cannot be saddled with additional responsibility other than verifying basic facts. If any mistake or mischief had been committed by the purchasing dealer, he alone would remain liable to the exclusion of the selling dealer. The forms that were used in the present case were genuine and it is also not disputed that M/s Jyoti Automobiles was a registered dealer engaged in trading in two wheelers.
5. On the other hand, learned Standing Counsel would submit, that in the present case, there was a clear collusion between the selling dealer and the purchasing dealer, inasmuch as, though, the assessee (selling dealer) claimed to have sold the goods to another registered dealer against Form III-A, however, at the same time, the assessee issued sale letters under the Motor Vehicles Act, 1988 (hereinafter referred to as the Act) to the customers. Therefore, the sale claimed by the assessee was only a device to avoid tax liability.
6. Having heard learned counsel for the parties and having perused the order passed by the authority, in the first place, the Tribunal has found that the assessee had itself issued sale letters on Forms 20-21 under the Act with respect to the two wheelers it claims to have sold to M/s Jyoti Automobiles. This finding of fact being not assailed, what survives for consideration is a consequence in law of such finding.
7. The claim of the assessee that it had sold the goods to another registered dealer for sale in the same form and condition, would necessarily imply that no privity of contract would ever arise between the assessee and the eventual customer/consumer. In fact, the assessee would not even be aware of the person to whom the goods may be sold, as that contract for sale would arise between the consumer and M/s Jyoti Automobiles at Meerut.
8. Therefore, the fact that the assessee itself issued sale letters on Forms 20-21 under the Act completely disproves the case set up by the assessee that it had sold the goods to M/s Jyoti Automobiles at Meerut. In fact, the sale letters which are issued by the assessee itself, prove that it had sold the goods to the consumers as, otherwise, the consumers would have no occasion to obtain the sale letters from the assessee.
9. Then, in view of the aforesaid position of facts, a clear case of collusion necessarily existed between the assessee and M/s Jyoti Automobiles as otherwise there could have been no circumstances in which Form III-A would have been issued by M/s Jyoti Automobiles. Clearly those forms were issued by M/s Jyoti Automobiles and accepted by the assessee only to avoid the tax liability which would have otherwise arisen against the assessee.
10. Therefore, the ratio in the case of M/s Gaurav Traders (supra) is clearly distinguished. It may be relevant to note that in that case this Court itself took note of the ratio in the case of Chunni Lal Parsadi Mal Vs. CST,reported in 1986 UPTC, 747 SC and observed that unless there was a clear case of farzi form or collusion between the selling dealer and the purchasing dealer, no liability may be fixed on the selling dealer merely because there may be some defect in the Form III-A issued by the purchasing dealer.
11. Inasmuch as, in the present case, it is clear that there was collusion between the two dealers, the Tribunal has not erred in rejecting the appeal filed by the assessee.
12. It is also been brought on record by the revenue that the assessment order against the purchasing dealer has been set aside by it's first appellate authority.
13. Thus, the questions of law as raised are thus answered against the assessee and in favour of the revenue:-
"(1) The ratio in the case of M/s Gaurav Traders (supra) is wholly distinguished and not applicable in view of the fact that there was collusion between the assessee and the purchasing dealer.
(4) and (5) In view of the collusive transactions observed between the assessee and the purchasing dealer, no benefit of Form III-A could be granted to the assessee."
14. Accordingly, the present revision is dismissed.
Date :- 31.7.2019 S.Chaurasia