DIXIT C. J - (1.) THIS order will also govern Misc. Petition No. 67 of 1962.
(2.) IN these two applications under Article 226 of Constitution, the prayer of the petitioners is that a direction be issued to the respondents commanding them to cancel the registration certificates of the applicants under the Central Provinces and Berar Sales Tax Act, 1947, and the Madhya Pradesh General Sales Tax Act, 1958, and that they be also restrained from imposing purchase tax under section 7 of the M. P. General Sales Tax Act, 1958, which; the petitioners contend is ultra virse, void and inoperative. The relevant facts are these. The petitioner Lachman Singh is a building contractor doing the business of building construction since 1953. The other petitioner, M/s Mahakoshal Construction Co., which is a partnership firm engaged in the business of building construction commenced its business in 1957. On 30th November 1954 the Nagpur High Court held in Pandit Banarasi Das v. State of Madhya Pradesh S T C 93 that the expression "sale of goods" in Entry 48 of List-II, Schedule-7, of the Government of India Act, 1935, was wide enough to cover all transactions in which property in the movables passed from one person to another for money, and that, accordingly, in a building contract there was a sale within Entry 48 of the materials used therein and that the provisions of the C. P. and Berar Sales Tax Act, 1947, imposing tax on materials used in a building contract were valid. After this decision, the petitioner Lachmansingh thought it necessary to get himself registered as a "registered dealer" under the Sales Tax Act of 1947 and accordingly made an application on 22nd March 1955 for the grant of a certificate of registration; In his application for registration, Lachman Singh described his business as consisting of "contracts of buildings and roads etc." A certificate of registration was issued on 23rd March 1955. The other petitioner, M/s Mahakoshal Construction Co., Jabalpur, applied for registration on 24th August 1957 describing its business as "construction work-' and obtained a certificate of registration on 6th September 1957. The case of Banarsi Das (1) went up in appeal before the Supreme Court and on 3rd April 1958 the Supreme Court, reversing the decision of the Nagpur High Court in that case, held that in a building contract the contractor constructs the building according to the specifications contained in the agreement and in consideration thereof receives payment, and that in such an agreement there is neither a contract to sell the materials used in the construction nor does property pass therein as movables and accordingly in a building contract, which is one and indivisible, there is no sale of goods and it is not within the competence of the Provincial Legislature under- Entry 48 to impose a tax on the supply of the materials used in such a contract treating it as a sale. The petitioner then thought that no sales tax could be imposed on them for the materials used by them in building contract executed by them and they were under no liability to get themselves registered under the Sales Tax Act of 1947. On this view, the applicant Lachmansingh addressed a letter to the Sales Tax Officer, Jabalpur, on 22nd December 1958 saying that his registration certificates may be treated as cancelled as he was a contractor and not a 'dealer'. The other petitioner also addressed a letter to the Sales Tax Officer, Jabalpur, on 10th October 1958 surrendering its sales tax registration certificate with the statement that "since the Supreme Court has held that contractors are not dealers and we are doing contract work in Madhya Pradesh and as such are exempt from sales tax, we hereby surrender our sales tax registration certificate". No reply of any kind was sent by the Bales Tax Officer to these letters of the petitioners for nearly a year and half. On 14th June 1960 Lachmansingh was, however, informed by the Sales Tax Officer, Jabalpur, that he was a dealer under the M. P. General Sales Tax Act, 1958, which had in the meantime come into force, and, therefore, his registration certificate could not be cancelled. The same reply was given to M/s Mahakoshal Construction Co. by the Sales Tax Officer on 10th May 1960. In the meantime the registration certificates of both the petitioners were renewed for the years 1960-61 and 1961-62. The petitioners say that they were obliged to have their certificates renewed. In support of these petitions, the argument of Shri Dabir, learned counsel appearing for the petitioners, was that according to the decisions of the Supreme Court in Gannon Dunkerley & Compay's case (( AIR 1958 SC 560. and Bansari Das v. State of M. P. 1958 MPLJ 467 -A I R 1958 SC 909= 1962 R N 477. in a building contract there was no sale of materials as such and, therefore, no sales tax could be inposed on the materials used by a building contractor in the execution of his contract works; and that the petitioners, who were both building contractors, could not therefore be regarded as 'dealers' in their activity and were thus under no obligation to get themselves registered under the Sales Tax Act of 1947 or the M. P. General Sales Tax Act, 1958. Learned counsel proceeded to say that the definitions of 'dealer', 'goods', 'sale', 'sale price', and 'turnover' given in the Act of 1958, in bo far as they sought to treat goods supplied or used in the execution of a work or construction contract as sold and liable to sales tax under the Act must, on the basis of the decisions of the Supreme Court referred to above, be regarded as beyond the legislative competence of the State Legislature; that as building contractors, the petitioners were not carrying on any business of Belling or supplying goods; that though the definition of 'dealer' given in the Act of 1958 covered any person carrying on the business of buying, there could not in fact be any business of 'buying'; that there could be a business of buying and selling but not a business of buying alone; and that, therefore, the petitioners could not be regarded as 'dealers' within the definition of that word in section 2 (d) of the Act of 1958. It was further contended that under section 15 of Act of 1958 only a dealer whose turover exceeded the limits specified in section 4 (5) was under an obligation to get himself registered; that turnover', as defined in section 2 (t) of the Act, meant the "aggregate of the amount of sale price received and receivable by a dealer in respect of any sale...." and this had been construed by this Court in Hiranand v. Commr. of Sale Tax 1962 MPLJ 61=1961 B N 436= 1961 JLJ 1467, to mean only a turnover in respect of sale of goods specified in Schedule III of the Act of 1958; that the petitioners as building contractors had no such turnover; that, therefore, they could not be compelled to have their registration certificates renewed from time to time; that the registration certificates originally issued to the petitioners were on the view of law expressed by the Nagpur High Court in the case of Baaarsi Das (4); that on that view being rejected by the Supreme Court and it being held that in a building contract there was no sale of materials as such, a vital change in law had occurred and the legal sanction for the validity of the registration certificates had failed; and that, therefore, the certificates must be regarded as granted by mistake and consequently the petitioners were entitled, under clause (c) of sub-section (10) of section 15 of the Act of 1958, to demand that the certificates be cancelled. Learned counsel also assailed the legality of the orders passed by the Sales Tax Officer assessing the petitioners to purchase tax for some years and urged that section 7 of the Sales Tax Act of 1958 was ultra virse as under Entry 54, List-II, Schedule 7 to the Constitution the State Legislature could make a law imposing a tax on the sale or purchase of goods but had no power to make any law with respect to tax both on the purchase and sale of goods; that the petitioners not being dealers within the definition of 'dealer' given in the Act, they were not liable to pay any purchase-tax under section 7 of the Act of 1958; and that even if they were liable to pay purchase- tax they were under no obligation to get themselves registered as dealers.
(3.) IN our judgment, both these applications must be dismissed on the ground that on the letters addressed by the petitioners to the Sales Tax Officer asking him to treat their registration certificates as cancelled no order of any kind with regard to the continuance or cancellation of the certificates could be passed under the relevant provisions of the Sales Tax Acts of 1947 and 1958 and the rules made thereunder, and the communications sent to them ir reply by the Sales Tax Officer that their registration certificates could not be cancelled were not any orders of the authority competent to decide the question of cancellation or continuance of the certificates. The petitioners in asking for the cancellation of certificates in the manner that they did, and the Sales Tax Officer in the way he dealt with the letters, totally ignored the relevant provisions relating to the cancellation of a registration certificate. The registration certificates had been issued to the petitioners under the C. P. and Berar Sales Tax Act, 1947, before the M. P. General Sales Tax Act, 1958, came into force on 1st April 1959. The Act of 1947 was repealed by section 52 of the Act of 1958. Under sub-section (6) of section 15 of the latter Act, the petitioners, who at the commencement of the Act of 1958 were holding certificates of registration, are deemed to be dealers registered under the Act of 1958 and holding certificates of registration under section 15. The question of cancellation of the certificates of registration granted to the petitioners is. therefore, governed by the provisions of the Act of 1958 and the rules made thereunder. Now, sub-section (10) of section 15 lays down- "(10) When- (a) a registered dealer discontinues or transfers his business; or (b) the liability of a registered dealer to pay tax ceases in accordance with the provisions of sub-section (3) of section 4; or (c) a registered dealer has been granted a certificate of registration by mistake, the Commissioner may, either on his own motion or on the application of the dealer in this behalf, cancel the registration but notwithstanding such cancellation the dealer shall be liable to pay tax for the period during which his certificate of registration remained in force." The procedure for cancellation of a registration certificate has been prescribed by rule 13 of the M. P. General Sales Tax Rules, 1959' That rule is as follows- "13. (1) When a registration certificate becomes liable to be cancelled under subsection (10) of section 15, the Sales Tax Officer shall, as soon as possible thereafter report the name of the dealer to the Commissioner for cancellation of the registration. (2) If on receipt of the report under sub-Tule (1), the Commissioner is satisfied that it is correct, he shall cancel the registration of the dealer with effect from the date of discontinuance or transfer of the business. (3) When the annual turnover of a registered dealer during a period of two consecutive years does not exceed the limits specified in sub-section (5) of section 4, or when a dealer has been granted a certificate of registration by mistake the appropriate Sales Tax Officer may, either on his own motion or on an application in form V by the dealer in that behalf and after such inquiry as he deems necessray, submit a report as soon as possible to the Commissioner for cancellation of the registration of the dealer. If the Commissioner is satisfied about the correctness of the report, he shall cancel the registration. In the cases falling under clause (a) of sub-section (10) of section 15 the cancellation shall have effect from the date of the discontinuance or transfer of the business. In cases falling under clause (b) or (c) of sub-section (10) of section 15, the liability of the dealer to pay tax shall cease with effect from the date of communication to him of the order of cancellation." It "will be seen that a registered dealer desiring cancellation of his registration certificate is required to make an application in form V. The form prescribed for an application for cancellation requires the dealer to state the number of his certificate of registration, the place of his business in the State, his gross turnover during the past two consecutive years and for the current year upto the date of the making of the application for all places of business in the State, and the grounds in support of the application for cancellation. The applicant is also required to state whether he does or does not import goods for sale and whether he does or does not manufacture the goods for sale. The application has to be verified and the applicant is required to declare that what he has Btated in the application for cancellation is true to the best of his knowledge and belief. Rule 13 speaks of "an application in form V by the dealer in that behalf". We had occasion to consider in Janata Hardware Stores v. B. S. Parihar 1962 M P LJ 839= AIR 1962 M P 315-1962 J L J 749., the difference between the expression "in form" and "in accordance with form", in connection with the validity of a notice under rule 33 of the Rules. We pointed out that there was a vital distinction between the two expressions and said that a notice would be substantially in accordance with the prescribed form if it did not depart from the prescribed form in any material respect; but if the relevant rule required that a notice should be "in form....." that meant that the form must be strictly and literally followed. The words "application in form V by the dealer in that behalf" occurring in rule 15 (3) must also be similarly construed, and it must be held that an application for cancellation of a registration certificate must be strictly and literally in the prescribed form V. The two letters addressed by the petitioners asking the Sales Tax Officer to treat their registration certificates as cancelled were not either in form or even in substance applications for cancellation of registration certificates in form V. The Sales Tax Officer, who deat with the letters of the petitioners in May and June 1960, should have noticed that on those letters the question of the cancellation of registration certificates could not have been considered at all and should have informed the petitioners accordingly directing them to file proper applications for cancellation.;