RAMASWAMI and SARJOO PROSAD, JJ. -
(1.) IN this case two questions have been referred : (1) Whether the petitioner is entitled to be registered as a dealer within the meaning of Section 2(c) of the Bihar Sales Tax Act, 1944; and (2) Whether the Sales Tax Officer has any jurisdiction under Section 20(4) of the Bihar Sales Tax Act, 1944, to cancel the petitioner's registration certificate after having obtained the previous sanction of the Deputy Commissioner and not of the Commissioner.
(2.) THE material facts are that on 29th September, 1944, the petitioner had applied for registration of his name on the ground that his gross turnover was about Rs. 25 lacs for the year 1943-44. On further enquiry the petitioner said that out of the gross turnover a sum of Rs. 86,868-7-0 represented the sale of shellac within the State of Bihar. On 1st October, 1944, the Sales Tax Officer granted him certificate of registration and asked the petitioner to submit quarterly returns. For the quarter ending 31st December, 1944, the petitioner made a return showing a gross turnover of Rs. 4,62,990-4-6. From the accounts produced and the statement made by the petitioner the Sales Tax Officer discovered that the petitioner was mainly engaged in selling and supplying goods outside the State of Bihar. After issuing notice under Section 20(4) of the Act and after considering the objection made the Sales Tax Officer cancelled the registration certificate by his order dated 30th September, 1945. The petitioner filed an application in revision before the Deputy Commissioner of Commercial Taxes, Bihar, but the petition was rejected and the order of the Sales Tax Officer was confirmed by the Deputy Commissioner. The petitioner then moved the Board of Revenue, Bihar, but his application was rejected on the grounds that the petitioner by adopting a peculiar method of business was escaping payment of sales tax in Bihar as well as in Bengal and the bulk of the business was not covered within the definition of "dealer" under Section 2(c) of the Act.
The first question in this case is whether upon the facts proved the petitioner is entitled to be registered as a dealer. Section 7(1) required that no dealer shall, while being liable under Section 4 to pay tax under this Act, carry on business as a dealer unless he has been registered under this Act and possesses a registration certificate. In order therefore to entitle the petitioner to be registered under the Act two conditions are requisite, namely, (1) that he must be a dealer and (2) that he must be liable under Section 4 to pay tax. "Dealer" is defined under Section 2(c) of the Act to be any person who carries on the business of selling or supplying goods in Bihar, whether for commission, remuneration or otherwise. As regards liability to pay tax Section 4 states that every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under this Act on sales effected after the date so notified. In the present case the taxing authorities have found that for the year 1943-44 the petitioner had a gross turnover of about 25 lacs and that out of this gross turnover a sum of Rs. 86,868 and odd represented the sale of shellac in Bihar. For the quarter ending 31st December, 1944, the petitioner submitted a return showing a gross turnover of Rs. 4,62,000 and odd and taxable turnover to be nil. For the next quarter ending 31st March, 1945, the petitioner submitted another return showing a gross turnover of Rs. 5,13,000 and odd and taxable turnover to be nil. It was claimed on his behalf that shellac worth Rs. 5,02,782 was despatched outside Bihar and the balance worth Rs. 10,324 was sold to the registered dealers. It is evident that for the two quarters ending 31st December, 1944, and 31st March, 1945, the petitioner had sold goods worth Rs. 12,509 and odd in Bihar, though the major part of his turnover represented sale or supply of goods outside Bihar. The Sales Tax Officer cancelled the certificate of the petitioner mainly on the ground that he did not pay any tax for the quarters ending 31st December, 1944, and 31st March, 1945. But on a proper construction of the material sections of the Act it is manifest that a dealer is entitled to be granted certificate though he actually pays no tax on any part of his turnover. As we have already said, Section 7(1) if read in context of section 4 imposes only two conditions for the grant of a certificate, viz., (1) that the applicant must be a dealer within the meaning of Section 2(c); and (2) that his gross turnover should exceed Rs. 5,000. It is immaterial for the purpose of the grant of certificate that the petitioner has not actually paid tax on any part of the gross turnover. The position is made more clear by the proviso to Section 7(1) which states that for the purposes of this sub-section the gross turnover shall be calculated without making the deductions referred to in sub-section (2) of Section 5. In the present case the petitioner did not pay any tax for the quarters ending 31st December, 1944, or 31st March, 1945, since major part of the turnover represented goods despatched by the dealer to an address outside Bihar. As regards sale inside the Sale the petitioner did not pay tax since the sales were made to a registered dealer of goods and was intended for resale. There is no finding by the Sales Tax Officer that the figures in the return made by the petitioner were false or fabricated. In the absence of any such finding it is clear that the petitioner was entitled to be registered as a dealer and to be granted a certificate of registration as provided by Section 7(1) of the Act. In the statement of the case the Board of Revenue has observed that a dealer who is not to pay tax because he sells his goods outside the province is debarred from claiming registration in the same way as a dealer who deals in exempted goods. In our opinion this interpretation of law is erroneous for the reasons, we have already stated. In the statement of the case the Board of Revenue has also said that the local sales of shellac shown in the return for the quarters ending 31st December, 1944, or 31st March, 1945, were made to exporters of shellac presumably to create evidence of sales in Bihar. In the order dated 10th December, 1946, the Commissioner has said : "The small alleged sales made to registered dealers in Bihar are not bona fide" and "if these sales were bona fide sales at least a small portion would have been taxable." There is no finding that the sales shown to have taken place in Bihar did not actually take place or that the returns filed by the petitioner were not believed as correct. The question whether the sales in Bihar were bona fide or otherwise has no bearing on the question whether the petitioner is entitled to be granted registration certificate under Section 7(1). If the sales in Bihar did actually take place the petitioner is entitled to be granted certificate even though the motive of the petitioner might be to conduct a large part of his sale outside the State and which sale is exempted from taxation under Section 5 of the Act. Another reason has also been given by the Board of Revenue for refusing to grant certificate to the petitioner. It is said that "the definition of a dealer clearly implied and excluded an isolated or occasional transaction" and in any case "the occasional transaction did not alter the character of the business of the dealer who is exporting shellac to Calcutta." This reasoning appears to be unsound since the business of the petitioner in the present case is to sell or supply shellac though major part of the business takes place in the shape of export of shellac outside the State. The circumstances that in the course of the same business the petitioner makes a few occasional sales inside the State does not alter the character of the business of the dealer. The sales which take place inside the State do not constitute a separate business of the petitioner; on the contrary, the whole business of sale of shellac inside and outside the State is a single composite business, a single course of dealing. The petitioner therefore must be held to be a dealer as defined in Section 2(c) of the Act.
(3.) ON the first question we are of opinion that the petitioner is entitled to be registered as a dealer within the meaning of Section 2(c) of the Bihar Sales Tax Act, 1944. The next question formulated is "whether the Sales Tax Officer has any jurisdiction under Section 20(4) of the Bihar Sales Tax Act, 1944, to cancel the petitioner's registration certificate after having obtained the previous sanction of the Deputy Commissioner and not of the Commissioner". Mr. B. C. Ghosh does not seriously dispute that the Deputy Commissioner had been duly empowered under Rule 61 of the Sales Tax Rules and the Sales Tax Officer could act under Section 20(4) after having obtained the previous sanction of the Deputy Commissioner. But the learned counsel stressed the point that even if the previous sanction of the Deputy Commissioner had been obtained the Sales Tax Officer had no jurisdiction under Section 20(4) to cancel the registration certificate in view of our answer to the first question. We therefore propose to answer the second question in a modified form. "Whether the Sales Tax Officer had any jurisdiction under Section 20(4) of the Bihar Sales Tax Act, 1944, to cancel the petitioner's registration certificate." In view of our answer furnished to the first question it is sufficient to say that the Sales Tax Officer had no jurisdiction to cancel the petitioner's registration certificate and that the Sales Tax Officer assumed jurisdiction to do so upon a misconstruction of the material provisions of the Act for the reasons we have already indicated.;