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Quality Chemicals vs Commissioner Of Trade Tax

High Court Of Judicature at Allahabad|30 November, 1999


1. These two revisions arise out of the common order dated April 21, 1999 passed by the Trade Tax Tribunal, Moradabad, allowing Second Appeals Nos. 90 of 1997 assessment year 1993-94 (Central) arid 91 of 1997 assessment year 1994-95 (Central) filed by the department.
2. Facts giving rise to the present revisions are that the revisionist is a registered dealer under the Central Sales Tax Act. A certificate of registration was granted on July 27, 1991 effective from April 11, 1991. It related to wholesale and retail trades of mentha oil, de-menthalised oil and essential oil. The assessee had obtained form C from the department against which he had purchased essential oil. When fresh application for issue of form C was moved the department was of the view that the assessee has misused the earlier forms issued to it inasmuch as the registration certificate was not granted to it in respect of resale of essential oil. Penalty proceedings Under Section 10A of the Central Sales Tax Act, 1956, were initiated for violation of the condition contained in Section 10(b) of the Central Sales Tax Act, 1956. For the assessment year 1993-94 penalty of Rs. 45,217 and for the assessment year 1994-95 penalty of Rs. 72,936 was imposed. First appeals filed by the assessee were allowed. The department thereafter filed second appeals which have been allowed by the Tribunal. The order of the first appellate authority was set aside and that of the assessing authority was restored. Aggrieved by the orders of the Tribunal, the dealer has filed these two revisions.
3. Sri Piyush Agrawal, learned counsel for the revisionist and Sri B.K. Pandey, learned Standing Counsel have been heard.
4. It is submitted that even though an application was moved subsequently for amendment for the registration certificate and from September 29, 1994 amendment was made in the certificate adding essential oil for resale but the original certificate was also granted for wholesale and retail trades of essential oil along with other items mentioned in the certificate. It is submitted that there was no error and if at all there was any error it was technical in nature. Sri B.K. Pandey has, however, pointed out that an application for registration is given in form A and Clause 16 of the application specifically provides for giving details of the goods or classes of goods purchased by the dealer in the course of inter-State trade or commerce and the purpose for which the goods are purchased, viz., for resale or use in the manufacture or processing of goods for sale or use in mining or the like purposes. It is submitted that it is likely that the dealer might not have stated in his application as to for what purpose the essential oil was to be purchased. It is further submitted that there was violation of Clause (b) of Section 10 of the Central Sales Tax Act, 1956 for which the penalty was imposed Under Section 10A.
5. During argument, Sri Piyush Agrawal has produced copy of the registration certificate in form B. Perusal of it shows that it was issued by the Sales Tax Officer, Moradabad. It is specifically stated in the certificate that the certificate is being issued wholly ¼iw.kZr½ for wholesale and retail trades of mentha oil (de-menthalised oil) and essential oil. Not only this column No. ¼N½ "cha" relates to details of packing material to be used in sale or resale of the goods and in this column the details given are, fibre drums, G.I. drums, polythene bags. Another column is for details of goods to be used in production, mining, etc. This column is blank. All this was not noted by the Tribunal or the assessing authority. It appears that the Tribunal as well as the assessing authority wrongly interpreted the descriptions in the certificate of registration. Trading means both purchase and sale. Once the certificate was issued for the wholesale and retail trading of the said goods it included purchase of the essential oil for purposes of the sale also. Subsequent modification in the certificate with effect from September 19, 1994 was not necessary. Therefore, the penalty has been imposed on mis-construction of the certificate.
6. Besides this there appears to be no violation of the provisions of Section 10(b) in the facts and circumstances of the case. At best the case of the department is that it was not stated in the certificate that essential oil was purchased for purposes of resale. Section 10A provides penalty in lieu of prosecution for offence committed Under Clause (b) or Clause (c) or Clause (d) of Section 10. According to the department the dealer had committed offence Under Section 10, Clause (b) of the Act which provides punishment in case any person being registered dealer falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration. In the instant case there is no dispute that the goods purchased by the assessee were covered by the certificate of registration ; the only question was whether after purchase, the goods he could have resold by him. In case he had used the goods for purposes other than those provided in the certificate of registration he could have been punished for violation of Clause (d) of Section 10 and not for violation of Clause (b). Thus, at the time of purchasing the goods it cannot be said that the dealer had falsely represented that the goods of such class were covered by his certificate. There was thus no misrepresentation. In these circumstances also penalty could not have been imposed.
7. Both the revisions are, therefore, allowed. The order passed by the Tribunal is set aside and that of the first appellate authority is restored.
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Quality Chemicals vs Commissioner Of Trade Tax


High Court Of Judicature at Allahabad

30 November, 1999
  • P Jain