Vineet Kothari, J. - (1.) (Oral) - The present Sales Tax Revision Petitions have been filed by the petitioner-assessee aggrieved by the common judgment dated 29.06.2012 of the learned Rajasthan Tax Board, Ajmer passed in Tax Appeal Nos. 934/2011/Jodhpur and 935/2011/Jodhpur respectively by which order, the learned Tax Board has dismissed both the appeals of the petitioner assessee and maintained the common order dated 17.03.2011 of the learned Deputy Commissioner (Appeals), Jodhpur Second, Commercial Taxes, Jodhpur whereby, the appeal filed by the Assessee was partly allowed.
(2.) By the impugned order dated 29.06.2012, the learned Tax Board upheld the imposition of additional tax under the CST Act on the petitioner-assessee on the ground that the C-Form declarations furnished by the assessee against the inter-State sale made by him to the purchaser - M/s. Hind Tiles Industries, Nagpur were not genuine and those C-Forms were purportedly issued to some other dealers of Nagpur and, therefore, the assessee upon such sales made to the purchaser was liable for payment of tax over and above the concessional rate of 4% of the tax. The relevant portion of the impugned order of the learned Tax Board is quoted herein below for ready reference:- ...[VERNACULAR TEXT OMITTED]... "From the perusal of the impugned orders, it does not appear that the assessing authority made any effort to establish the collusion of the selling dealer in production of the false or fake C forms before him. In the absence of any enquiry having been held, the appellate authorities were justified in setting aside the penalty under section 65 of the Rajasthan Sales Tax Act upon the selling dealer." ...[VERNACULAR TEXT OMITTED]... "22. However, as far as question of penalty u/s 61 of the Act is concerned, the imposition of the same by the Assessing Authority under Section 61 of the Act of 2003 to the extent of double the amount of tax is concerned, the same cannot be sustained and deletion of penalty in these circumstances, where a debatable question was agitated by the respondent-assessee before the appellate forums created under the Act, it cannot be said that the assessee deliberately filed wrong returns or particulars of taxable turnover or mala fide claimed 100% input tax credit. A benefit of doubt in this regard certainly goes in favour of the respondent-assessee." ...[VERNACULAR TEXT OMITTED]... 3. This second round of litigation arise because the assessment orders for the relevant period were challenged and in pursuance of the remand order dated 30.01.2006 of this Court. The earlier round of litigation was undertaken by the original company namely, Grasim Industries Limited (White Cement Division) (Formerly known as "Indian Rayon and Industries Limited which is now known as "Ultratech Cement Limited"). The short order dated 30.01.2006 passed by the coordinate Bench of this Court is quoted herein below for ready reference:- "S.B. Salex Tax Revision Petition No. 324/2005. S.B. Salex Tax Revision Petition No. 322/2005. S.B. Salex Tax Revision Petition No. 323/2005. S.B. Salex Tax Revision Petition No. 325/2005. S.B. Salex Tax Revision Petition No. 464/2005. S.B. Salex Tax Revision Petition No. 465/2005. Date of Order : 30th January, 2006. Present Hon'ble Mr. Justice Bhagwati Prasad Mr. Dinesh Mehta ] Mr. Rajendra Mehta ], for the petitioner. Mr. Sangeet Lodha, for the respondent/s. Heard. With out prejudice by any of the findings given by the Tax Board or any other authorities, the assessing authority will enquire the validity of the C Form. The parties will be provided opportunity to lead evidence on all aspects of the validity of C Form, inclusive of the Gazette publication, statutorily required. With these observations, the revisions are disposed off. The matters are remanded to the assessing authority. The parties will make themselves available before the assessing authority on 20th February, 2006. sd/- (Bhagwati Prasad), J." After such remand, the Assessing Authority held the enquiry in the matter and again re-imposed the additional tax on the assessee and the relevant extract of the assessment order passed by the Assessing Authority is quoted herein below for ready reference:- ...[VERNACULAR TEXT OMITTED]... 4. The learned Deputy Commissioner (Appeals), Jodhpur Second, Commercial Taxes, Jodhpur dismissed the first appeal filed by the assessee on 07.03.2011 and the second appeal preferred by the assessee was dismissed by the learned Tax Board on 29.06.2012. Hence, the assessee has filed the present revision petition before this Court. 5. It appears from the arguments advanced by the learned counsels for the parties and the orders of the authorities below that the judgment of this Court dated 04.10.2007 in the case of Assistant Commissioner, Commercial Taxes v. M/s. Metro Appliances Limited reported in 2007 (3) ILR (Raj.) 434 was not brought to the knowledge of any of the authorities below and that is why, the enquiry was not properly held by the Assessing Authority despite a remand by this Court earlier. In the circumstances of the case, the matter with regard to 'C' Forms ought to have been referred to the Nagpur Assessing Authority for holding the requisite enquiry, as to whether actually the original Blank 'C' Form-Book was issued to whom and as to how, such 'C' Forms were received and issued by the present purchaser M/s. Hind Tiles Private Limited and then, proceed to affix tax liability and recover the same from such purchasing dealer only. The relevant extract from the aforesaid judgment of the Assistant Commissioner, Commercial Taxes v. M/s. Metro Appliances Limited (supra) is quoted herein below for ready reference:- "8. The crux of the matter is as to whether the selling dealer who relied upon the declaration forms furnished to him by another registered dealer, namely, the purchasing dealer, should be proceeded against for recovery of additional or remaining tax at the full rate of tax ignoring the concessional rate of tax based on such declaration forms or is it the purchasing dealer who furnished such declaration forms should be proceeded against for recovery of such additional or balance amount of tax. 9. It is true that selling dealer who in law is under as obligation to collect proper rate of sales tax on the goods sold by him collects only the concessional rate of tax in particular circumstances relying on the declaration forms given by the purchasing dealers and such declaration forms in original are furnished by the selling dealer to his assessing authority in support of or justifying the collection of the tax only at the concessional and it is only at a later point of time when assessment procedure is undertaken if some defect in the declaration form is found by the assessing authority of the selling dealer that the concessional rate of tax would not be available, but the question is who should bear the brunt? The obvious and plain answer to the said question is that it is the person who has furnished such declaration form and not the person who has relied upon the same, should bear such brunt or be held responsible for payment of additional tax if any. In the ordinary course of business while dealing with various purchasing dealers, the selling dealer cannot be excepted to hold any detailed inquiry, nor he has any legal obligation to do so under the Act and the Rules, to establish the genuineness, correctness, validity or justification on the part of the purchasing dealers to furnish the relevant declaration forms on the strength of which the selling dealer collects only concessional rate of tax from him and not the full rate of tax. Admittedly such declaration forms are issued to the purchasing dealers who are also registered dealers of the same department by the assessing authority having jurisdiction over such purchasing dealers on fulfilment of certain conditions and for particular purposes. A perusal of Rule 23 quoted above clearly lays down the procedure for application, issuance, keeping stock of utilisation and surrender of unused declaration forms by the registered dealer who gets them issued. If there is any defect in such declaration forms or in law it is later on found that such registered dealer is not entitled to use such declaration forms for particular purposes, then it is that dealer himself who ought to be held responsible for such lacunae in his legal entitlement to furnish such declaration forms to the selling dealer to get the benefit of the concessional rate of tax. It is purchasing dealer who really receives the benefit of the concessional rate of tax and not the selling dealer. The selling dealer merely collects concessional rate of tax on the strength of such declaration forms furnished by the purchasing dealers and not otherwise. If such declaration forms are not furnished by the purchasing dealers, the selling dealer could always collect the full rate of tax from the purchasing dealer. Therefore, it is the purchasing dealer who leads the selling dealer to believe in the ordinary course of business that the purchasing dealer is a registered dealer and he is entitled to make such purchases from him at the concessional rate of tax under the relevant provisions of law and relevant notification on the strength of such declaration forms. Therefore, if upon scrutiny, such declaration forms are found to be have not been legally or properly used by the purchasing dealer, it is the purchasing dealer alone who can be proceeded against in law and not the selling dealer. 10. The question that when the assessing authority of the selling dealer embarks upon the inquiry during his assessment and finds that such declaration forms are not proper or are defective or that the purchasing dealer was not legally entitled to give such declaration forms to avail concessional rate of tax, the remedy with such assessing authority is not to impose the difference additional tax upon the selling dealer himself but the remedy lies in making a report to the assessing authority having jurisdiction over the purchasing dealer in question to proceed against such purchasing dealer for recovery of the difference amount of tax. Like in the present case, if the assessing authority is allowed to proceed to recover such difference tax from the selling dealer himself without even calling upon the purchasing dealer to establish his legal right to issue such declaration forms for making the particular purchases in question, it would be travesty of the principles of natural justice and law if such difference tax is allowed to be imposed and recovered form the selling dealer. There is no justification for compelling the selling dealer to pay such difference or additional tax denying the concessional rate of tax in such cases, unless of course there is a case of collusion between the purchasing dealer and the selling dealer made out by the Revenue authorities and which is established beyond reasonable doubt after holding inquiry. Even in the case of collusion between the parties, it is either of the dealer, either the selling dealer or the purchasing dealer who can be saddled with such difference tax in case there is an established misuse of declaration forms and it is one of those parties, either of them, who is more at fault who can be saddled with such difference liability. In that case also, the dealer who gets such declaration forms issued from the concerned Revenue authority and furnished such declaration forms without there being a legal entitlement thereto vested in him and thus, defrauded the Revenue of the full rate of tax by availing the concessional rate of tax or exemption in particular transactions that such party would be proceeded against in law. 11. The right of the assessing authority to proceed against the selling dealer in the cases of fraud or collusion is also available only if such allegation is made against the selling dealer with precise particulars and not mere wild allegation or general statement of fraud or collusion can empower the assessing authority to proceed against the selling dealer. But the question is where there is no collusion or fraud played upon by the selling dealer and who bona fidely believes that such purchasing dealer had a legal right to use such declaration forms for availing concessional rate of tax on particular sales of goods, then there would be no justification for proceeding against the selling dealer in such cases. It is not the matter of convenience of the Revenue authorities nor it is a matter that the assessing authority of the selling dealer first happens to embark upon such inquiry and find that particular declaration forms have been misused in particular cases, but is the question of jurisdiction as to upon whom the liability in law for payment of such additional or difference tax should be affixed. In the considered opinion of this court, where there is no fraud or collusion alleged against the selling dealer, it is only the purchasing dealer who deserves to be proceeded against for recovery of the difference tax in case it is found that the declaration forms were not legally valid for the particular sale transaction. 12. In the present case, it also appears that the assessing authority has imposed the additional tax, interest and penalty on the selling dealer even without calling upon the purchasing dealer, the co-operative society of the Police Department and holding any enquiry with regard to their legal entitlement to use the declaration in form ST-17 for purchase of ceiling fans from the assessee, the selling dealer, and merely saying that the cooperative society is not a Government department is not enough. What is exactly the character and composition of such co-operative society, who are its shareholders and members, whether it is running on no profit no loss basis, whether the Government department or the Police Department had full control over it or not, all these may be the relevant that it was or it was not a Government department and whether the declaration forms ST- 17 could legally be issued for purchase of ceiling fans in question or not. No enquiry of this nature appears to have been made by the assessing authority as the impugned assessment order does not narrate any such enquiry into these fact. Therefore, without holding this basic inquiry if the additional tax was imposed on the selling dealer, it is all the more unfortunate besides being illegal and unauthorized. 13. Way back in the year 1966, the Hon'ble Supreme Court in the case of The State of Madras v. Radio and Electricals Ltd. & Anr. reported in (1966) 18 STC 222 (SC) , Hon'ble Justice J.C. Shah speaking for the Bench of three Hon'ble Judges of the Supreme Court focused on this kind of controversy and observed as under:-- "The Act seeks to impose tax on transactions, amongst others, of sale and purchase in inter-State trade and commerce. Though the tax under the Act is levied primarily form the seller, the burden is ultimately passed on to the consumers of goods because it enters into the price paid by them. Parliament with a view to reduce the burden on the consumer arising out of multiple taxation has provided in respect of sales of declared goods which have special importance in inter-State trade or commerce, and other classes of goods which are purchased at an intermediate stage in the stream of trade or commerce, prescribed low rates of taxation, when transactions take place in the course of inter-State trade or commerce. Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations made to him. He must satisfy himself that the purchaser is a registered dealer, and the goods purchased are specified in his certificate: but his duty extends no further. If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the rules and the representation is recorded in the certificate in Form 'C' the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods he incurs a penalty under section 10. That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer. The selling dealer is under the Act authorised to collect from the purchasing dealer the amount payable by him as tax on the transaction, and he can collect that amount only in the light of the declaration mentioned in the certificate in Form 'C'. He cannot hold an enquiry whether the notified authority who issued the certificate of registration acted property, or ascertain whether the purchaser, notwithstanding the declaration, was likely to use the goods for a purpose other than the purpose mentioned in the certificate in Form 'C'. There is nothing in the Act or the rules that for infraction of the law committed by the purchasing dealer by misapplication of the goods after he purchased them, or for any fraudulent misrepresentation by him, penalty may be visited upon the selling dealer." 6. The Calcutta High Court also appears to have taken a similar view in the case of Rajasthan Pipes Pvt. Ltd. v. Commercial Tax Officer, Assessment Wing & Ors. reported in [2004] 138 STC 383. 7. No contra view has been produced before this Court by either of the counsels. In view of the aforesaid judgment, the controversy involved in the present case is no longer res integra and, therefore, both the revision petitions filed by the petitioner - Ultratech Cement Limited deserve to be allowed. It will be, however, open to the Assessing Authority in the present case now to take appropriate action against the purchasing dealer M/s. Hind Tiles Private Limited of Nagpur by sending a report to the Assessing Authority at Nagpur having territorial jurisdiction over that assessee namely, M/s. Hind Tiles Pvt. Ltd. and the Assessing Authority at Nagpur may hold the necessary enquiry in the matter as indicated above regarding 'C' Forms furnished by M/s. Hind Tiles Pvt. Ltd., Nagpur and then, proceed to recover such additional tax from the purchasing dealer on behalf of the Assessing Authority at Jodhpur (Rajasthan). 8. Accordingly and in view of the above, the present revision petitions filed on behalf of the petitioner-Ultratech Cement Limited are allowed. No costs. A copy of this order be sent to the Rajasthan Tax Board, Ajmer for its perusal and applying the law laid down by this Court in all similar cases and the parties concerned forthwith. Revision Allowed.;