IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH G.S.T.R. No.4 of 1999 Date of decision:12.01.2009 M/s Sat Pal and Sons ...Petitioner versus The State of Punjab ....Respondent CORAM: HON'BLE MR. JUSTICE M.M.KUMAR HON'BLE MR. JUSTICE H.S.BHALLA Present: Mr. S.S.Brar, Advocate for the petitioner. Ms. Sudeepti Sharma, DAG, Punjab, for the respondent. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? M.M.KUMAR, J. At the instance of the 'Assessee' the Sales Tax Tribunal, Punjab, Chandigarh, on the basis of order dated 18.09.1995, passed by this Court in the case of the dealer for the Assessment year 1984-85, has referred the following questions of law for opinion of this Court :- “(1) Whether in the facts and circumstances there was legal evidence to decline the claim for deductions preferred by the dealer under Section 5(2)(a)(ii) of the Punjab General Sales Tax Act in respect of sales made to registered G.S.T.R. No.4 of 1999 - 2 - dealers especially when the dealer was not confronted with the material relied upon? (2) Whether in the facts and circumstances when the printed forms duly authenticated by the Assessing Authority issued to various dealers under the seal of the authority and used by them while effecting purchase from the petitioner- dealer could be called in-genuine particularly when these forms were neither cancelled nor declared obsolete ? (3) Whether interest under Section 11-D could be imposed from retrospective date and not from the date of assessment? Facts as per the statement sent by the Tribunal are that the Assessee is a registered dealer under the Sales Tax Laws and is engaged in crushing of oil seeds. It had filed returns for the year 1984-85 with the Assessing Officer for a sum of Rs.46,11,082.17 paise claiming sales to the registered dealer to the extent of Rs.33,34,508.49 paise. The Assessing Officer recorded dissatisfaction with the returns filed by the dealer and sent a notice to it under Section 11 (2) of the Punjab General Sales Tax Act, 1948 (for brevity 'the Act') which was duly served upon the dealer. The dealer tendered his reply contesting the claim of the revenue. During the assessment proceedings, it was found that the sales made to 10 registered dealers were bogus because they were either non- G.S.T.R. No.4 of 1999 - 3 - existent or bogus dealers, which amounted to Rs.7,32,126.30 paise. Accordingly, the claim made by the dealer to that extent was disallowed and was added to the total turnover declining its deductions claimed under Section 5(2)(a)(ii) of the Act. The aforesaid addition resulted in additional demand of Rs.1,21,305.29 paise, vide order dated 29.02.1988 which included penalty of Rs.40,000/- under Section 10(7) and interest amount of Rs.28,246/- inflicted under Section 11-D by the Assessing Authority. On appeal filed by the dealer, the Appellate Authority vide its order dated 16.12.1991 upheld the order of the Assessing Authority, but remanded the case back to the Assessing Authority regarding Sales Tax-XXII forms submitted by the dealer in respect of Bill Nos. 2161 and 2163. The Appellate Authority also remanded the matter regarding levy of tax under Section 4-B on bardana. The order on other issue was confirmed. Against the order dated 29.01.1988, the dealer approached the Tribunal which vide its order dated 30.11.1992 dismissed the appeal. The dealer then approached this Court for referring the questions of law for adjudication. This Court vide order dated 18.09.1995 directed the Tribunal to refer the questions of law for adjudication of this Court. Accordingly, the aforementioned questions of law have been referred to this Court. It is pertinent to notice the findings on the question of non- existent/bogus dealer. The Assessing Authority has confronted the dealer G.S.T.R. No.4 of 1999 - 4 - with a list of 10 firms which were claimed to be bogus. The names of the aforesaid 10 firms are as under :- Sr. No. Name of the dealer Transaction date Value 1. M/s Chawla Feed Store, 22.11.84 21,721/- Jandiala. 2. M/s Tarsem Lal and Bros, 15.12.84 19,308/- Jandiala. 25.12.84 21,369-56 21.1.85 21,721-50 3. M/s J.P. Bros. Amritsar 26.11.84 1,31,566-00 4. M/s Ramesh Kumar Rajeev 6.10.84 1,40,489-65 Kumar, Amritsar 5. M/s Satish Kumar Rakesh 30.9.83 23,430-00 Gurdaspur. 6. M/s Raman Kumar and Co. 12.11.84 24,446-74 Dera Baba Nanak 7. M/s Prem Chand and Sons, 12.2.85 20,625-36 Malakpur. 8. H.N.Traders, Batala 20.12.84 21,369-56 9. Nav-Bharat Vanaspati & 25.3.85 1,30,783-00 Allied Industries Doraha. 10. M/s Jain Traders, Patiala. Bill No.2197 18,915-80 25.3.85 16,995-80 25.3.85 16,928-50 9.3.85 18,845-19 6.3.85 17,095-62 5.3.85 20,072-04 30.1.85 20,554-75 31.1.85 20,354-75 18.2.85 18,845-16 25.2.85 18,252-12. The Assessing Authority went on to observe that the dealers at serial No.1,2 and 4 to 8 did not exist at the address shown in the list. The fact was duly confirmed by the Sales Tax authorities. The dealer at G.S.T.R. No.4 of 1999 - 5- serial No.3 and 9 have denied the factum of making any purchases from the selling dealers. No evidence to the contrary could be produced in case of dealer at serial No. 10. A peculiar situation has emerged which shows scandalous nature of transaction. He has made a statement to the Excise and Taxation Officer, Patiala that he had no business transaction with the selling dealer, but it was used by one Shri Parmod Kumar of Patiala who paid him money as commission for sending Sales Tax-XXII forms another document. The Assessing Officer did not find any satisfactory reply to the aforementioned transaction and proceeded to add and refused to grant deduction from the total turnover which could otherwise be eligible under Section 5(2)(a)(ii) of the Act. The view of the Assessing Officer was approved by the Appellate Authority and the Tribunal dismissed the appeal. It is true that the duty of the selling dealer would come to an end when he satisfies himself that the purchasing dealer is a registered dealer as has been held by Hon'ble the Supreme Court in the case of Modi Spinning and Weaving Mills Company Limited v. Commissioner of Sales Tax (1965) 16 STC 310. The aforesaid proposition has not been disputed by the learned State counsel. However, the findings of fact recorded by the Assessing Officer which have been accepted by the Appellate Authority as well as the Tribunal are that the claim made by the petitioner for deductions under Section 5 (2)(a)(ii) of the Act could not be granted because either the transactions are bogus or the purchasing dealers are non-existent. Therefore, in the facts and circumstances of the case, it cannot be concluded that the directions claimed by the petitioner-dealer have been declined without G.S.T.R. No.4 of 1999 - 6 - any legal evidence. Therefore, both the questions No.1 and 2 are answered in favour of the revenue and against the petitioner-dealer and question No.3, which is a consequential question stands also answered against the dealer and in favour of the revenue. (M.M.KUMAR) JUDGE (H.S.BHALLA) JUDGE 12.01.2009 sanjeev