Debiprosad Pal, J. - (1.) The petitioner is a private limited company and is a dealer in iron and steel goods and hardware. The petitioner as a dealer is assessed under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the Act). For the four quarters ending Chaitra, 1375 B.S., the petitioner sold iron and steel goods to different parties, some of which were registered dealers. The sales to the registered dealers of those goods were made either in cash or by cheques. The registered dealers who purchased the goods from the petitioner issued declaration forms against the purchases and on the basis of the said declaration forms obtained from the purchasing dealers the petitioner claims exemption in respect of those sales under Section 5(2) (a) (ii) of the Act. The Commercial Tax Officer while making the assessment for the said period by his order dated 23rd March, 1973, disallowed the claim of Rs. 2,20,739.61 made by the petitioner under Section 5(2)(a)(ii) of the Act. The reason for the disallowance of sales to the following registered dealers, viz., Messrs. Bansal Iron and Steel Engineering Works, Messrs. Hindusthan Commercial and Engineering Co. and Messrs. Shree Mahabir Industrial Corporation, was that the registration certificates of the said three dealers were subsequently cancelled on 9th November, 1970, 25th November, 1970, and 29th October, 1971, respectively. The other grounds disclosed in the order were that the payment was made in cash and the challan number was not written on the declaration forms. Sales made to Messrs. Parkash Impex were disallowed on the ground that the said purchases were not covered by the registration certificate issued in the name of purchasing dealer. For the four quarters ending 31st Chaitra, 1376 B.S., respondent No. 1 issued a notice dated 7th March, 1973, calling upon the petitioner to appear and produce the books of accounts in support of returns. Aggrieved by the said order of assessment for the period ending 31st Chaitra, 1375 B.S., and the notice issued under Sections 11 and 14(1) of the Act for the period ending 31st Chaitra, 1376 B.S., the petitioner moved this court and obtained a rule nisi.
(2.) The learned counsel on behalf of the petitioner contended that at the time when the sales to the three purchasing dealers were effected and the declaration forms were obtained, the registration certificate was not cancelled by the taxing authorities. The subsequent cancellation of the registration certificate of these purchasing dealers did not invalidate the declaration forms issued by them earlier. It was further contended that the failure to mention the challan number in the declaration form or the fact that the payment was made in cash cannot be a valid ground for disallowing such sales. The learned counsel for the respondents submitted that the declaration form filled in by the purchasing dealers was defective inasmuch as the challan number was not given. He further submitted that in the context of the subsequent cancellation of the registration certificates of the purchasing dealers, respondent No. 1 was justified in disallowing the sales made to those purchasing dealers as such sales were not accepted by him to be genuine.
(3.) In order to examine the rival contentions of the parties, it is necessary to refer to some of the relevant provisions of the Act and the Rules framed thereunder. Under Section 5(2) (a) (ii) of the Act sales to a registered dealer of goods of the class or classes specified in the certificate of registration of such dealer as are intended for resale by him in West Bengal, or for use by him directly in the manufacture in West Bengal of goods for sale, are to be deducted in computing the taxable turnover of the selling dealer. Section 7 of the Act imposes upon a dealer liable to pay tax under the Act the obligation of being registered under the Act and to possess a registration certificate. Under Rule 27A of the Bengal Sales Tax Rules (hereinafter referred to as the Rules), a dealer who wishes to deduct from his gross turnover the amount in respect of a sale to a registered dealer under Section 5(2) (a)(ii) shall produce in respect of such sale, the copy of the relevant cash memo or bill, according as the sale is a cash sale or a sale on credit and a declaration in form XXIV obtainable by a purchasing dealer on application from the appropriate Commercial Tax Officer and duly filled in and signed by the purchasing dealer. Rule 27A(4) requires a registered dealer whose certificate of registration has been cancelled to forthwith surrender to the appropriate Commercial Tax Officer all unused declaration forms remaining in stock with him and the appropriate Commercial Tax Officer shall thereupon cancel the declaration forms so surrendered and report the fact of such cancellation to the Commissioner. Sub-rule (6) of Rule 27A requires the Commissioner to publish in the Calcutta Gazette, the particulars of declaration forms which have been so cancelled. A registered dealer for obtaining declaration forms has to apply in writing to the appropriate Commercial Tax Officer stating his requirement of such forms and has to furnish such other particulars, statements and information and produce such other documents as the Commercial Tax Officer may require for the purpose of satisfying himself about the bona fide use of such forms issued to the applicant on previous occasions and the bona fide nature of the applicant's requirement of such forms on the present occasion. Section 7(4a)(ii) of the Act empowers the Commercial Tax Officer to demand reasonable security for the proper custody and use of the declaration forms. Sub-rule (2) of Rule 27AA vests the Commercial Tax Officer with the powers even to reject the application for declaration forms where he is not satisfied that such declaration forms have been used bona fide or that are required bona fide. The above analysis of the relevant provisions of the Act and the Rules shows that a selling dealer who claims the benefit of deduction under Section 5(2) (a) (ii) of the Act has to satisfy two conditions: -- (a) he must produce the relevant cash memo or the bill, according as the sale is a cash sale or a sale on credit, (b) he must produce the declaration in form XXIV duly filled in and signed by the purchasing dealer. The statute imposes upon the purchasing dealer the obligation to fill up the declaration forms duly. If the purchasing dealer fails or neglects to fill up the declaration forms duly and to include the prescribed particulars therein, the seller cannot be made responsible for such failure or omission to fill up the declaration forms properly. In the present case, although the form of declaration has been properly filled in, the only allegation in respect of the three purchasing dealers is that the challan number was not written on the declaration form. The sales of goods to the registered dealers are supported by bills and also by vouchers. Copies of the statement of the bills and challan regarding those sales have been annexed to the petition. It is not the respondents' case that such vouchers and challans were not made available for inspection at the time of the assessment. In the context of these facts one has to consider whether the omission to mention the dealer's challan number renders the declaration form invalid in law. It is true that in the form of declaration the challan number has to be mentioned. The question therefore arises whether the obligation to mention the challan number as required in form XXIV is mandatory or not. A statutory rule requiring certain acts to be done may be either imperative in character or directory in nature. In the absence of an express provision, the intention of the legislature is to be ascertained by weighing the consequences of holding such a rule to be directory or imperative. It is the duty of the court to consider the importance of the provision that has been disregarded and the relevance of that provision to the general object intended to be secured by the Act, and upon a review of the case in that aspect decide whether the matter is what is called imperative or only directory (Per Lord Penzance: Howard v. Bodington (1877) 2 P.D. 203). No universal rule can be laid down for the construction of statute as to whether any enactment is to be considered directory only or obligatory. In each case a balance has to be struck between the inconvenience of its rigid adherence and the inconvenience of its departure from its terms. There are some rules which are vital and go to the root of the matter. Compliance with such rules is mandatory. There are other rules, the breach of which may be an irregularity which can be dispensed with provided there is substantial compliance with the rules. If the disobedience of such a rule frustrates the very aim and object of the statute, the direction to do an act enjoined by the rule is to be regarded as a mandatory one. The purpose for which the declaration forms are insisted upon under the law seems to check large scale evasion of sales tax. It may be possible for a selling dealer to inflate his claim of sales to registered dealers when such sales are not in fact made. There may be also misuse of such declaration forms for the purposes not authorised under the law. The taxing authorities are, therefore, competent to find out whether the certificate is genuine. They may also ascertain whether the goods purchased are covered by the registration certificate of the purchasing dealers and may make enquiries about the contents of the certificate of registration of the purchasing dealers. The declaration form filled in and signed by a purchasing dealer may enable the authority to identify such registered dealer to whom the sales are claimed to have been made. It is, therefore, necessary that the registration certificate number of the purchasing dealer is to be included in the declaration form. The particulars in the prescribed form which are necessary to identify the purchasing dealer can be considered to be substantial and non-compliance of such particulars may render the declaration form invalid. Omission to fill up the other particulars in the prescribed form does not necessarily make the declaration form liable to be rejected. In the case of Durga Sree Stores v. Board of Revenue, West Bengal [1964] 15 S.T.C. 186, the Division Bench held that where the certificate of registration issued to a registered dealer contemplates that the purpose of purchase might well be either the purpose of manufacture or resale or any of the several alternatives mentioned in the foot-note of that form, the mere non-striking of any of the alternatives in the declaration forms would not be a fatal defect and by itself would not render the declaration form defective. In the case of Anil Kumar Dutta v. Additional Member, Board of Revenue, West Bengal [1967] 20 S.T.C. 528, omission to give the date of registration certificate was not considered to be a vital and substantial omission as from the number of the registration certificate being given in the declaration form, it was not difficult to make the purchasing dealer identified. In the present case, the omission to mention the challan number, in my view, is not a vital and substantial omission, as in spite of the said number not being given in the declaration form, the purchasing dealer was identifiable as the certificate of his registration number has been given in the declaration form. Moreover, the bills and the vouchers (challans) have all been annexed to the petition and were also available before respondent No. 1. In these circumstances, the disallowance of sales to the three purchasing dealers on the ground that challan number has not been given on the declaration form cannot be supported.;